Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

TYNE AND WEAR BILL [Lords]

Order for consideration, as amended, read.

Clause 44

ASSISTANCE TO INDUSTRY, ETC.

Amendment made: In page 34, line 3,

leave out clause 44.—[Mr. Goodlad.]

Schedule 2

SECTION 29 OF ACT OF 1961 AS HAVING EFFECT IN ACCORDANCE WITH SECTION 20 (CONTROL OF DEMOLITIONS) OF THIS ACT.

Amendment made: In page 43, leave out lines 10 to 20 and insert:
(5A) In addition to a notice served under subsection (1) of this section, the local authority may, by a notice served under this subsection, within twenty-eight days after the service of notice under subsection (3)(a) of this section, require part of the demolition to be deferred, but not beyond the expiry of the period for serving notice specified in subsection (4) of this section.
(5B) A person who contravenes a requirement made under subsection (5A) of this section shall be liable to a fine not exceeding £500, but in any proceedings for an offence under this subsection it shall be a defence for the person charged to prove that he took all reasonable precautions and exercised all due diligence to avoid the commission of the offence."—[Mr. Goodlad.]

To be read the Third time.

Oral Answers to Questions — FOREIGN AND COMMONWEALTH AFFAIRS

Middle East

Mr. Adley: asked the Lord Privy Seal if he will make a statement on the progress made with the European Economic Community initiative aimed at securing the peaceful return of Palestinian land presently occupied by Israeli military forces.

Mr. Woodall: asked the Lord Privy Seal what representations he has received concerning Her Majesty's Government's changes in policy towards the Middle East.

The Lord Privy Seal (Sir Ian Gilmour): M. Thorn has completed his first round of visits to the area and contacts with the various parties are continuing. Her Majesty's Government's aim is to secure the widest possible support for the balanced principles of the Venice declaration as a step towards a comprehensive settlement. Representations have been received from both critics and supporters of the Venice declaration.

Mr. Adley: Be it in Afghanistan or Palestine, will my right hon. Friend confirm that it is Her Majesty's Government's policy to uphold the right of the indigenous population to live their lives free from external domination? In the absence of an impartial United States policy, will my right hon. Friend continue to work as closely as he possibly can with his colleagues in the other eight EEC countries?

Sir I. Gilmour: As my hon. Friend knows, it is the policy of Her Majesty's Government to secure a withdrawal of all Soviet troops in Afghanistan and a withdrawal from the occupied territories by Israel as part of a comprehensive settlement guaranteeing Israel's security. I assure my hon. Friend that we shall continue to work closely with the other members of the Nine.

Mr. Woodall: Does the right hon. Gentleman agree that now we have another war in the Middle East, this time between Iran and Iraq, it would be far


better to support the permanent peace agreement, namely, the agreement between Egypt and Israel? Would it not be better for Her Majesty's Government to continue to support the Camp David agreement rather than pussyfoot around with this European initiative?

Sir I. Gilmour: We support the Camp David agreement. As the hon. Gentleman knows, we are aiming to build on that agreement rather than cut across it. He will also be aware that, although the agreement has been extremely successful between Egypt and Israel, it has been less successful in making progress over the Palestinian problem. That is why the Nine made their Venice declaration, which the hon. Gentleman will remember was warmly welcomed by President Sadat.

Sir Hugh Fraser: Perhaps my right hon. Friend will pay more attention to the excellent advice that has been tendered to him by the hon. Member for Hemsworth (Mr. Woodall). Perhaps M. Thorn is now engaged in self-solving the Iraqi-Iranian dispute. What purpose is he serving? At this stage my right hon. Friend must admit that if it were not for the Camp David agreement there might be a general conflagration in the Middle East.

Sir I. Gilmour: I do not think that my right hon. Friend could have listened to what I said. I did not say that we were in any way opposed to the Camp David settlement. I said that we were seeking to build upon it. As he must recognise—I think that it is generally recognised—the Camp David agreement has so far made limited progress on the Palestinian problem as opposed to considerable progress between Egypt and Israel. We hope that things will get better.

Mr. J. Enoch Powell: Will the Government be careful in this and other contexts to repress the tendency of the European Economic Community to behave as if it were a State, since initiatives of this sort incur responsibilities that can only be borne and, therefore, only accepted, by nation States?

Sir I. Gilmour: I do not think that I will follow the right hon. Gentleman into that form of metaphysical assertion. The

fact is that the Nine have considerable interests in the Middle East and they have a considerable interest in trying to gain a comprehensive peaceful settlement in the Middle East. It would be a dereliction of duty if they washed their hands of the matter.

Mr. Cyril D. Townsend: Will my right hon. Friend confirm that if the Israeli Prime Minister physically moves his offices into occupied East Jerusalem the Foreign Secretary will instruct all his representatives not to visit the Prime Minister at those offices?

Sir I. Gilmour: As my hon. Friend knows, we have made it quite clear that we do not recognise any unilateral actions taken over Jerusalem.

Mr. Shore: The Lord Privy Seal gave the House a very unrevealing reply to the first question. He also made some grudging comments about the great achievement of Camp David. Will the right hon. Gentleman be more specific? We know that M. Thorn had discussions in Tel Aviv and that he also had discussions with Mr. Arafat in Beirut. Is there any sign that progress has been made towards achieving the two main principles that were set out at the Venice summit? When will some type of formal report be made, or have the European Ministers and M. Thorn come to the conclusion that the timing is not right, that there are other major issues in the Middle East—which may have greater priority—and that they should wait until the American election is over, in order to have proper talks with the American Government as well?

Sir I. Gilmour: I do not agree that I was grudging about Camp David. What I said would probably receive assent from virtually all the parties to the Camp David agreement. M. Thorn did not make a formal report. Contacts are continuing and we shall consider how best to proceed. As the right hon. Gentleman knows, this is an extremely difficult matter. The idea put forward by my right hon. Friend the Member for Stafford and Stone (Sir Hugh Fraser) and by the right hon. Gentleman to the effect that because there is another crisis in the Middle East it is less urgent to solve this crisis, is entirely erroneous.

Afghanistan

Mr. Whitney: asked the Lord Privy Seal if he will make a statement on the present situation in Afghanistan.

The Minister of State, Foreign and Commonwealth Office (Mr. Peter Maker): There are still about 85,000 Soviet troops in Afghanistan. They continue to face strong resistance. There is no sign that the Soviet Union is prepared to take account of the wishes of the Afghan people. A settlement will necessitate the complete withdrawal of Soviet troops and freedom for the Afghan people to choose their own Government.

Mr. Whitney: Although I am grateful to my lion. Friend for that reply may I ask whether he agrees that it is vital to maintain international pressure on the Soviet Union to cease its aggression against Afghanistan? To that end, will he mobilise international support for the idea of a conference—perhaps on the lines of last year's Lancaster House talks—so that the people of Afghanistan might be afforded the same rights of self-determination as the people of Zimbabwe now enjoy?

Mr. Blaker: I entirely agree with my hon. Friend about the importance of maintaining pressure on the Soviet Union. In the past 11 months the world has shown admirable recognition of the need to do that. The matter will come up again, within a week or two, at the United Nations General Assembly. A conference could be a useful move at the appropriate time. However, it would be important for all the relevant parties to be represented at such a conference, including representatives of the Afghan resistance. At present, I see no indication that the Soviet Union is prepared for a conference along those lines.

Mr. Russell Johnston: Has the Minister got any up-to-date figures for the number of Afghan refugees in Pakistan and elsewhere?

Mr. Blaker: It is estimated that there are about 1 million Afghan refugees in Pakistan. That is an indication of the feelings of the Afghan people towards the Soviet occupation and the Babrak Karmal regime.

Mr. Churchill: Is it not a scandal that 11 months after the Soviet invasion and

occupation of Afghanistan, the gallant resistance fighters of that country have to take on a major slice of the Soviet war machine, including T72 tanks, Hind helicopter gunships, MiGs and Tupolevs, with virtually bare hands? Is it not time for the British Government to state openly that they will supply arms of the required calibre to help those resisting Soviet imperialism?

Mr. Blaker: I agree about the importance of the role that the Afghan resistance plays. The Afghan resistance movement is better equipped than it was at the beginning of the year. However, it would not help the resistance movement if we were to be specific about its sources of assistance. It is clear that Soviet forces have suffered several thousand casualties and we have had reports of substantial losses of helicopter gunships belonging to the Soviet Union.

Mr. Shore: As regards maintaining pressure on the Karmal Government, which on all the evidence has not increased its internal support, does it occur to the hon. Gentleman and his right hon. Friends that this matter could be raised in the credentials committee of the United Nations? Will the hon. Gentleman also explain why he decided to vote for the Pol Pot Government?

Mr. Blaker: The Pol Pot question is an entirely separate matter. As regards the credentials of the Karmal regime, there was clearly insufficient support for that question to be raised.

Cyprus

Mr Dubs: asked the Lord Privy Seal what proposals he now has to resolve the difficulties facing Cyprus.

Sir Ian Gilmour: Intercommunal talks under United Nations auspices, the object of which is to resolve the Cyprus problem, resumed in Nicosia on 16 September and are continuing. The Government welcome this, believing such talks to be the best way to secure a just and lasting settlement.

Mr. Dubs: Given that there is now a different Government in Turkey, and that Greece is seeking a closer relationship with NATO, is not the time right for a British initiative? Will the Lord Privy Seal take steps towards meeting


the Turkish and Greek Governments with a view to getting meaningful negotiations going at governmental level?

Sir I. Gilmour: I agree with the prolegomena of the hon. Gentleman's question. United Nations' talks are being held. It is early days, but so far they have gone quite well. It is right for all interested Governments—and we are more interested than almost anybody else—to support the intercommunal talks.

Mr. Rowlands: The Lord Privy Seal will know that it is widely and understandably held in Cyprus that part of the problem lies in Ankara. Have the Government had any direct discussions with the Turkish authorities? What response has he had?

Sir I. Gilmour: Part of the problem certainly lies outside Cyprus. The intercommunal talks have got off to a reasonably good start. No one would want to be too hopeful, but they have got off to a better start than they did before. We want to build on that.

Middle East

Dr M. S. Miller: asked the Lord Privy Seal if he will make a statement on progress in establishing a Middle East settlement; and if he will ensure that Her Majesty's Government give no formal recognition to the Palestine Liberation Organisation in any negotiations so long as the organisation continues to call for the destruction of the State of Israel.

Mrs. Reneé Short: asked the Lord Privy Seal if he will give an undertaking that no Minister will meet representatives of the Palestine Liberation Organisation until the Palestine Liberation Organisation has agreed unequivocally Israel's right to exist in secure recognised boundaries.

Sir Ian Gilmour: We have consistently called on the the PLO to accept Israel's right to a secure existence, and will continue to do so. That would be an essential element in any settlement, but it would not be helpful to the cause of peace for us to tie our hands by giving any such undertaking. But our policy on recognition of the PLO remains unchanged.

Dr. Miller: When the right hon. Gentleman and his right hon. Friend consider the criteria to be adopted as regards the granting of statehood, will he make clear that no people can expect to become a State if they try, or threaten, to obliterate another nation?

Sir I. Gilmour: The hon. Gentleman knows our policy, because it is embodied in the Venice declaration. That means recognition by the PLO of Israel's right to exist, and recognition by Israel of the Palestinians' right. That is our policy, and will remain our policy.

Mr. Walters: Does my right hon. Friend agree that this might be an opportune moment, given the European initiative, for the EEC Governments to point out forcibly to the Government of Israel that the best solution would be for the PLO to recognise Israel's right to existence behind secure and guaranteed borders at precisely the same time as Israel recognises the rights of the Palestinians to self-determination and to a State of their own within 25 per cent. of Palestine?

Sir I. Gilmour: That solution has been put forward for many years by Dr. Nahum Goldmann, who, as the House knows, is an extremely distinguished—if not the most distinguished—Zionist. That is one way forward. At present it is not the way that is most likely to prevail.

Mr. Hooley: Has there been any indication from Israeli sources that the State of Israel would give any recognition whatsoever to the rights of the Palestinians to live in their own independent State?

Sir I. Gilmour: I understand that Israel is still strongly opposed to any independent Palestinian State.

South Africa

Mr. Winnick: asked the Lord Privy Seal when he next expects to meet the South African Ambassador to discuss Anglo-South African relations.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Richard Luce): My right hon. Friend has no plans to meet the South African Ambassador in the immediate future.

Mr. Winnick: Is the hon. Gentleman aware that the 17-year imprisonment of


Mr. Nelson Mandela is in itself a great crime on the part of the South African authorities? Should not the British Government proclaim loudly and clearly that Nelson Mandela should be released?

Mr. Luce: The hon. Member may be aware that the British Government voted for resolution No. 473 at the United Nations Security Council on 13 June this year. That resolution called for the release of all those who had been imprisoned on political grounds, and that includes Mandela. The South African Government are well aware of the British Government's view on this matter.

Mr. Wall: Will my hon. Friend welcome the new South African Ambassador to this country; and, as the most important issue between our two countries now is the future of Namibia, will he say how the United Nations can be recognised as an impartial umpire when it takes the view that SWAPO is the sole and authentic voice of the Namibian people? I feel that that is totally untrue.

Mr. Luce: Of course we welcome the new ambassador. We believe in a policy of contract and dialogue between our two Governments as the most constructive approach. On the Namibian question, as my hon. Friend knows, we do not recognise, and never have recognised SWAPO as the sole and authentic representative of the Namibian people. We take the view very strongly that it is up to the people of Namibia to determine who their representative should be. The United Nations team has recently been in South Africa, and it will report shortly to the Secretary-General.

Mr. Robert Hughes: Is it not clear that the latest United Nations mission to South Africa has once again been met by a blank denial by the South African Government that there will be any implementation of the UN plan? Since few of the Minister's colleagues deny the legitimacy of SWAPO and South Africa also denies it, why will they not put it to the test as quickly as possible? What will the British Government do to stop the South Africans' total prevarication on this issue?

Mr. Luce: I am not aware where the hon. Member gets his evidence. We are still awaiting the report which Dr. Wald-

heim will make to the Security Council on the outcome of those extremely important talks last week in South Africa. We are not in a position to judge what progress has been made until we have that report.

Mr. Nicholas Winterton: Does my hon. Friend not agree that it is very important for this country to have good relations with the Government of South Africa, not only because of the strategic importance of South Africa but because that country has raw materials that are vital to the industries of the Western world? Will he not also make some statement from the Dispatch Box that we will make representations to the United Nations to ensure that not only SWAPO (E) is recognised as a negotiating body by the United Nations but that the Democratic Tumhalle Alliance, which is a multi-racial group doing wonderful work in Namibia and which has abolished all apartheid in that country, should also be recognised as a negotiating body within the UN?

Mr. Luce: I have been in South Africa recently and have had discussions on these problems prior to the visit of the UN team. During the course of the visit of the UN team last week, led by Mr. Brian Urquhart, discussions were held with the South African Government and leaders of several of the internal parties, including the DTA.

Mr. Rowlands: The Minister seems to be the only person who does not know that those talks last week broke down and that there was a stalemate. Is he not aware that continuing prevarication by the South African Government over the settlement in Namibia will only mean that more and more people will turn to the gun rather than the ballot box in order to find a solution?

Mr. Luce: I am very surprised that the hon. Member should make an assumption that last week's discussions led to a break-down. There is no basis upon which he can make that assumption. I hope that he will reconsider what he has said.

Iraq

Mr. Mikardo: asked the Lord Privy Seal what representations he has made


to the French Government about the supply of weapons-grade uranium to Iraq.

The Minister of State, Foreign and Commonwealth Office (Mr. Nicholas Ridley): Iraq is a party to the nonproliferation treaty. The supply of this material for a civil research reactor is under international safeguards. We are not satisfied that there are grounds to press the French to break their contracts.

Mr. Mikardo: Is the Minister aware that Iraq, in addition to being a signatory of the non-proliferation treaty, is also bound by treaties not to invade a neighbouring country? Since that country has manifestly violated that undertaking, is it not doubtful whether it can be held to its signature to the non-proliferation treaty? Is it not the height of folly to give a country which has shown such aggressive attitudes as Iraq has done recently the ability to make war with nuclear weapons which could begin a world confrontation? Since the Lord Privy Seal attaches so much importance to a combined policy by the EEC should he not say to the French gently that any hope of such a combined policy is being sacrificed on the altar of what the French believe to be their own national interest?

Mr. Ridley: I agree that it would be a serious and unprecedented development if a party to the non-proliferation treaty were to break its obligations that it had solemnly entered into. But of course, the supply by France, which has been discussed by the Government with the French, was part of the normal provision for nuclear power which is allowed under the treaty, and it took place before the recent war.

Mr. Maxwell-Hyslop: Will my hon. Friend bear in mind that what the hon. Member for Bethnal Green and Bow (Mr. Mikardo) said about Iraq must apply to Israel with equal force? That country dishonestly obtained large quantities of nuclear material, widely believed to be for military purposes. Is he also aware that Israeli aircraft are daily attacking another independent country—the Lebanon—without being in a state of declared war? Should not this cause us equal apprehension?

Mr. Ridley: One can have apprehension about nuclear proliferation where-ever it occurs. Of course, Israel is not a signatory of the non-proliferation treaty.

Mr. Faulds: Since it is now generally acknowledged that Israel has nuclear weapons, with the assistance of South Africa, what information do the Government have about Israeli involvement in the air-raid on the nuclear centre in Iraq?

Mr. Ridley: That was merely speculation and I can neither confirm nor deny it.

Polisario Front

Mr. Alton: asked the Lord Privy Seal if he will make a statement on the British attitude towards recognition of the Polisario Front.

Mr. Luce: We have not given official recognition to the Polisario Front. It is not the practice of Her Majesty's Government to accord recognition to such movements. In any event, to do so in this case would be inconsistent with our policy of neutrality on the Western Sahara dispute.

Mr. Alton: Is the Minister aware that 26 of the member States of the Organisation for African Unity have now recognised the Polisario Front as the representatives of the Saharan people? In the light of that, will he reconsider the British Government's position? Can he tell us whether the position of the British Government has in any way changed as a result of the visit of Her Majesty The Queen to Morocco this week?

Mr. Luce: On the latter part of that question, there is no reason why our policy should change following the visit of Her Majesty to Morocco, a country with which we have long-standing and close relations. Our attitude to Western Sahara is one of neutrality. That is the same view as is held by all our friends in the EEC and it is up to the OAU which is seeking to mediate—and there is no unanimity within the OAU on this—to do its best to find a settlement. We will support whatever agreement is reached between the parties.

Mr. Aitken: Even if our policy towards Morocco has not changed, would it not be right for the Government to issue a strong protest about the discourtesy


shown to Her Majesty The Queen in the past few days?

Mr. Luce: I take this opportunity to say that there has been no question of any insult being shown to Her Majesty. On the contrary, I am informed that she enjoyed herself during her visit to Morocco.

Angola

Mr. Hooley: asked the Lord Privy Seal if he will raise at the United Nations as a threat to peace in Africa the repeated incursions into Angola by South African forces.

Mr. Luce: No, Sir. The United Nations Security Council has already debated the matter, and paragraph 6 of resolution 475 states that the Council remains seized of the matter.

Mr. Hooley: Do the attacks on Angola derive directly from the continued illegal occupation of Namibia by South Africa? Will the Minister confirm that there is an agreed United Nations plan for peaceful transition to independence, which has the full support of the five negotiating powers but which is being obstructed only by South Africa? What pressure will be put on South Africa to cease that obstruction?

Mr. Luce: I reaffirm strongly that the British Government, together with the Group of Five, support as strongly as possible the proposal that the UN should supervise the elections in Namibia. As I said earlier, we are awaiting the report of the team that has been in South Africa for discussions. We hope that progress will shortly be made.

Mr. Amery: Does my hon. Friend agree that free and fair elections cannot be conducted in Namibia under United Nations auspices as long as the General Assembly regards only one party—SWAPO—as the sole representative of the people, when the United Nations organisation finances SWAPO and the Finnish Commissioner declares himself whole heartedly on the side of SWAPO? Does he accept that it cannot be a fair match when the referee has declared himself to be on one side?

Mr. Luce: During the discussions in South Africa last week between the UN

team and the South African Government, the anxiety of the South African Government about the impartiality of the United Nations was discussed. I am sure that every effort was made to reassure them. With his experience, my right hon. Friend will know that there is a considerable distinction between resolutions passed by the General Assembly—and I have expressed the British Government's view about that resolution—and those passed by the Security Council, which has called on the United Nations to carry out free and fair elections, impartially, among all the parties in Namibia.

Mr. Rowlands: If the Minister did not like the term "broken down", which I used earlier, does he agree that the talks have at least reached a stalemate or have been baulked by the South African Government? What further action do the Government intend to take to end the stalemate?

Mr. Luce: Surprisingly, the hon. Gentleman seems to misunderstand the situation. We are awaiting the report to the Security Council from the United Nations team that has just been to South Africa. The hon. Gentleman makes repeated assumptions that the talks have broken down. He has no evidence for that. There is every prospect of progress in the near future.

Mr. Jim Spicer: Does my hon. Friend agree that it would reflect well on the United Nations if occasionally it condemned the incursions into Namibia from Angola by SWAPO guerrillas, directed not against the South African security forces but against the Ovambo people, who are being killed and maimed on an increasingly large scale?

Mr. Luce: I agree that it is singularly important to make clear, as we and the Group of Five have done, that our condemnation of violence is not one-sided. Violence from any source hinders the prospect of a peacefully negotiated settlement.

Chile

Mr. Canavan: asked the Lord Privy Seal what representations he has received about the reinstatement of the British Ambassador and the resumption of arms sales to Chile.

Mr. Ridley: Since the announcements to the House of the restoration of Ambassadors in January and of the lifting of the arms embargo in July, both matters have been the subject of lively political debate. No arguments have been advanced, however, which lead us to conclude that either decision was unjustified.

Mr. Canavan: As Claire Wilson's detention was reported by her sister to British consular officials in Chile on 18 July, will the Minister now admit that he knew of her detention and torture before he announced the ending of the arms embargo on 22 July and that he deliberately concealed that information in order to curry favour with his fascist friends? As he has failed to stand up for the basic human rights of a British subject, will he do the honourable and decent thing and resign?

Mr. Ridley: The hon. Gentleman will be disappointed to know that, on hearing of Miss Wilson's detention, the British Ambassador in Santiago managed to get her released on 18 July. It was not until 22 July that she made any complaint of maltreatment. That information was not received in London until 23 July, after the lifting of the arms embargo was announced.

Mr. Eldon Griffiths: Bearing in mind the concern on both sides of the House about unemployment, does my hon. Friend agree that, if we do not supply Chile with military equipment, the French certainly will, which will only transfer British jobs to French workers? Will he refute the attacks on the British Ambassador and thank him for his intervention, which went beyond his call of duty, on behalf of Miss Wilson, who has the most tenuous connections with the United Kingdom?

Mr. Straw: She is a British citizen, that is all.

Mr. Ridley: I believe that the presence of the British Ambassador was instrumental in securing the early release of Miss Wilson. I also believe that nations should trade in all commodities, save those arms that can be used for internal repression. We pursue the same policy as our predecessors, only not selectively.

Mr. Shore: May I remind the Minister of the reply given in the other place

by one of his colleagues on 10 March, when he said that the Government would not export arms to a country that was guilty of torture? Does the Minister accept that he has sought to justify such action on the grounds that it was only one little case of torture, but we know very well that civil rights in Chile have not improved? They have deteriorated. Furthermore, is he aware that the present regime, through a plebiscite, has taken powers to maintain itself for the next decade? Should he not reconsider the matter? Would it not be very much in the interests of this country and its good name for the Government to say that we will not supply arms to such a regime? If the Minister is worried about the arms being supplied by another European country, why does he not get his right hon. Friend to raise the matter at the so-called Council of Foreign Ministers?

Mr. Ridley: My noble Friend made it clear that he was speaking of arms that could be used for internal repression, as the right hon. Gentleman will see if he checks the record. We do not approve of either the human rights record or, more still, the nature of the democracy or lack of democracy of a large number of countries. Some do not even have a terminal date for the autocratic power of the regime, yet 'such considerations never worried the right hon. Gentleman's Government.

Gibraltar

Mr. McQuarrie: asked the Lord Privy Seal what response he has received from the Spanish Government on the situation regarding the free movement of persons between Spain and Gibraltar.

Sir Ian Gilmour: The Spanish Government have recently assured us that their commitment to the Lisbon agreement remains firm. The Goverment continue to work for its early implementation.

Mr. McQuarrie: Does my right hon. Friend accept that the situation is deteriorating and is not assisting the Gibraltarians? My right hon. Friend is aware of the recent visit I made to the mayors in El Campo, who are keen to have a settlement. Does he agree that there should be detente between the people of Gibraltar and the people of


El Campo, with a view to arriving at a settlement? Does he further agree that it would be helpful to have the settlement before Christmas to avoid disappointment similar to that experienced by the people of Gibraltar on 3 June, when the gates remained closed?

Sir I. Gilmour: I agree that the situation is deteriorating in the sense that the agreement that we hoped would come into force shortly after 1 June still has not come into effect. We greatly regret the delay. I agree with what my hon. Friend says about detente. I very much hope that the agreement will come into force well before Christmas.

Anglo-Soviet Relationships

Mr. Gwilym Roberts: asked the Lord Privy Seal if he will initiate bilateral talks with the Soviet Government aimed at improving Ango-Soviet relationships and reducing world tension.

Mr. Blaker: The Government are ready to work with the Soviet Union to reduce the causes of world tension and to develop bilaterial relations on a businesslike and constructive basis. We are looking for some sign, especially in relation to Afghanistan, that the Soviet Union is prepared to do likewise.

Mr. Roberts: Does the hon. Gentleman agree that approaches made from time to time by the West German and French Governments have proved helpful and that any initiative taken by countries on either side of the East-West power blocs to remove misunderstanding and distrust makes a contribution?

Mr. Blaker: The simplest way of removing distrust and improving confidence would be for the Soviet Union to remove its forces from Afghanistan and to cease to breach the Helsinki agreement by tyrannising its own people.

Oral Answers to Questions — EUROPEAN COMMUNITY

United Kingdom Membership

Mr. Marlow: asked the Lord Privy Seal whether he will now seek to renegotiate the United Kingdom's membership of the European Economic Community.

Sir Ian Gilmour: No, Sir.

Mr. Marlow: I rather thought that my right hon. Friend would give that answer, but time will prove a marvellous tutor. Can he bring to the attention of the House any industrialised country the currency of which has had a sudden and massive increase, boosted by the surging value of its raw materials and natural resources, and which, at the same time, had no control over its own trading policy? Could he say what happened to the industrial and manufacturing base of that country?

Sir I. Gilmour: I am not sure that most people would entirely agree with my hon. Friend's diagnosis of the situation and, unless he is suggesting import controls, I am not certain of the relevance of his question. He must realise that import controls are not the policy of the Government side of the House and are the policy of only part of the Labour side.

Mr. Russell Johnston: Is the right hon. Gentleman aware that many of us who strongly support our continued membership of the Community feel that the criticism that it receives is due more to what has not been done or attempted than to existing policies? Will he give an assurance that the Government will seek to give a lead in these matters by, for example, tackling employment policies, possibly through an increase in the size of the regional fund?

Sir I. Gilmour: I agree with the first part of the hon. Gentleman's question. There is a lot in that. He will be aware that as a result of the 30 May agreement the Community is committed to restructuring the budget, during which many of the matters that the hon. Gentleman has raised will inevitably come up.

Mr. Dykes: Does my right hon. Friend agree that when hon. Members use the word "renegotiate" in this sense it is a euphemism for "withdraw", though they are afraid to say so, particularly after the resounding support for our continued membership expressed at, for example, the Conservative Party conference? Is not the psychology of public opinion that, while people grumble about various detailed aspects of policy, which is natural, they nevertheless wish to remain in the EEC and to develop it institutionally through the strength of all the members?

Sir I. Gilmour: I agree with my hon. Friend, though I do not think that it is fair to suggest that my hon. Friend the Member for Northampton, North (Mr. Marlow) is afraid to advocate withdrawal. Certainly, the contrast between the Conservative Party conference and the Labour Party conference on the question of Europe has been widely noted.

Mr. Shore: It will come as no surprise to the House that the Government have neither the will nor the wish to alter the unequal and shameful treaty of accession which a previous Conservative Government signed. As the right hon. Gentleman reminded us, there is in the unsatisfactory agreement reached on 30 May, a timetable for further discussions about the future of the CAP and the budget. Those are important matters and I wish to put a serious proposal to the Lord Privy Seal. On these vital matters will he circulate to hon. Members and to the country a Green Paper setting out what the Government wish to see changed in the budget and the CAP? They should not leave the whole thing to the initiative of the Commission in Brussels.

Sir I. Gilmour: We understand that the right hon. Gentleman has to parade round the paddock on this matter, and he has done that fairly satisfactorily. He knows that he is wrong to say that the 30 May agreement was unsatisfactory. That comes extremely badly from someone who was in the previous Government, because they achieved nothing on this matter. Our agreement was a good one and the right hon. Gentleman is rightly envious of it.
I shall consider what the right lion. Gentleman said about a Green Paper, but I think that he will agree, on reflection, that that is not necessarily the best way of setting about negotiations. Whether or not we have a Green Paper, there will be no question of our leaving everything to the Commission or to any of the other people who figure in the right hon. Gentleman's demonology. Of course we shall be in contact with all our partners and with the Commission and we shall be discussing the matters in the House. I do not believe that the best way of achieving our negotiating ends would be to put them forward in a Green Paper.

Japan

Mr. Hal Miller: asked the Lord Privy Seal what progress has been made in developing a European Economic Community policy towards Japan.

Sir Ian Gilmour: The Foreign Affairs Council on 22 July took the view that Commission proposals for a common commercial policy required further study. The subject is on the agenda for the next Foreign Affairs Council meeting on 24 and 25 November.

Mr. Miller: Is my right hon. Friend aware that there is widespread support, certainly in the motor industry in this country, for the views reported today to be held by Mr. Haferkamp, that there is a need at the meeting next month for the EEC to arrive at a common trade policy towards Japan, for fear that otherwise there will be individual national initiatives which could lead to an outbreak of protectionism?

Sir I. Gilmour: I see my hon. Friend's point. If there were a satisfactory Community agreement it would have greater strength than member States acting individually could have. I am sure that my hon. Friend will agree that, in order to be acceptable to the United Kingdom, a common Community position on trade with Japan would have to safeguard our interests at least as effectively as do existing industry arrangements.

Mrs. Dunwoody: Is not the truth of the matter that the Lord Privy Seal does not have a satisfactory agreement at either industry or EEC level and that if an agreement is to be negotiated he will need new machinery which does not exist within the Community? Is not the reality that the Japanese are flooding our car market and that by the time the Government get round to doing something about it we shall not have a lorry or a car market left?

Sir I. Gilmour: The hon. Lady is indulging in her customary exaggeration. It is not happening; so far the Japanese have abided by their agreements. There is not a satisfactory Community agreement at the moment. That was the whole point of the question of my hon. Friend


the Member for Bromsgrove and Red-ditch (Mr. Miller). He was suggesting that there should be an agreement.

Mr. Ian Lloyd: My right hon. Friend will be aware that our right hon. and learned Friend the Chancellor of the Exchequer recently circulated to all members of the National Economic Development Council a remarkable paper on Japan by our former ambassador there, Sir Michael Wilford. Since that paper would help to concentrate wonderfully the minds of those seeking to establish an effective European response to the Japanese challenge, will my right hon. Friend arrange for the paper to be given an even wider circulation?

Sir I. Gilmour: I will certainly consider my hon. Friend's suggestion.

Mr. McNamara: Is it not a fact that the problems of the motor car industry and import penetration are not related solely to Japan, but also to our alleged Community partners? Should not the real purpose behind the question be not just to single out Japan, but to have a proper policy that will protect this country against exports from other countries?

Sir I. Gilmour: I do not accept what the hon. Gentleman says. It has nothing to do with the question, which is concerned with Japan.

Treaty of Rome

Mr. Dormand: asked the Lord Privy Seal if he will now make proposals to amend the Treaty of Rome.

Sir Ian Gilmour: No, Sir.

Mr. Dormand: Does the right hon. Gentleman agree that there is now widespread disenchantment with our membership of the EEC, and that the basic problem is related to the iron corset of the Treaty of Rome—in particular, some of us think, more from a political than an economic point of view? Is it not now clear that such a treaty, drawn up so many years ago, must be ready for fundamental change?

Sir I. Gilmour: I do not agree that there is great disenchantment. One of the interesting things that happened after the goings-on at Blackpool was that people who had not previously been all that keen on membership suddenly realised how

disastrous withdrawal would be. There may well be improvements that could and should be made to the Treaty, but I do not think that that is the fundamental question at present. The fundamental matter is to get on with the restructuring to which the Community was committed by the agreement of 30 May last year.

Sir Anthony Meyer: Is my right hon. Friend aware that the decision of the Labour Party at its conference to seek withdrawal from the EEC has caused great difficulty for the Conservatives in the European Parliament in forwarding British interests there? It is very difficult to convince our European partners of the essential levity of the Labour Party, which in opposition invariably preaches that it will withdraw and in government is forced to recognise the realities of the situation.

Sir I. Gilmour: I agree with my hon. Friend, but in speaking to our partners in Europe I have found no great difficulty in convincing them about the levity of the Labour Party.

Mr. Jay: If the Government are opposed to import controls, why do they operate the common agricultural policy?

Sir I. Gilmour: Because, as the right hon. Gentleman knows, we have protected our agriculture in one way or another for many years. That was done very successfully after the war by the Labour Government of whom the right hon. Gentleman was a member and to whom he continually looks back. The CAP is just one other way of protecting our agriculture.

Mr. Alan Clark: My right hon. Friend makes rather terse denials to hon. Members on both sides of the House, but surely he cannot maintain that the terms of our membership are set in concrete for all time. Reciprocal advantages and obligations evolve with the passage of time, do they not?

Sir I. Gilmour: I think that the sentiments expressed by my hon. Friend are absolutely impeccable.

Council of Ministers

Mr. Spearing: asked the Lord Privy Seal if he will make a statement concerning meetings of the Council of the European Economic Community held since the end of July.

Mr. Straw: asked the Lord Privy Seal if he will make a statement concerning meetings of the Council of the European Economic Community held since the end of July.

Sir Ian Gilmour: I refer the hon. Member to the replies I gave to my hon. Friend the Member for Lincoln (Mr. Carlisle) on 27 October.

Mr. Spearing: I thank the right hon. Gentleman for that reply. Can he confirm that on 7 October the Council of Ministers agreed the pattern of supplementary measures that would be part of the British repayments? Will he also confirm that they will last for only three years, that only 70 per cent. of the expenditure will fall on the EEC, with 30 per cent. falling on Her Majesty's Government, and that these payments are primarily controlled by the Council of the EEC? When shall we have a list of the regional measures that the Government propose? How much additional United Kingdom expenditure will that involve?

Sir I. Gilmour: I think that the hon. Gentleman will receive a list fairly soon after the measures have been submitted to the Commission. The hon. Gentleman was misleading when he talked about "only 70 per cent." Each project will be financed to the tune of only 70 per cent. by the Community, but the figures that I gave the House after the 30 May settlement still apply. There has been no question of reducing our budget refund by 30 per cent.

Mr. Straw: Is the right hon. Gentleman aware that while the British Government have let the British textile industry bleed almost to death the Dutch Government in August and the French Government yesterday announced substantial packages of aid to their textile industries? Was any objection to these schemes taken in the Council of Ministers? If not, do the British Government intend to ensure that they secure similar schemes of assistance?

Sir I. Gilmour: The hon. Gentleman will appreciate that this matter did not come up in the Council of Ministers, and that detailed questions on the textile industry should go to my right hon. Friend the Secretary of State for Trade.

Mr. Teddy Taylor: As our net contribution to the EEC so far this financial year has been about £3 million a day, can my right hon. Friend explain a little more why he and his colleagues agreed to our receiving only 80 per cent. of what we were promised a short time ago?

Sir I. Gilmour: I have already tried to explain, I thought clearly, in a written answer to my hon. Friend. The point is that we agreed that not less than 80 per cent. should be paid by the end of the financial year. The rest will be paid after that. There is no question of our agreeing to 80 per cent; it is simply that not less than 80 per cent. will be paid by the end of the financial year.

Mr. Hardy: Would the right hon. Gentleman care to tell the House a little more about the initiatives that the Government pursued at the meetings in regard to looking after the interests of the British steel industry, both the public and private sector? How would the right hon. Gentleman describe the response to those initiatives?

Sir I. Gilmour: There has been general unity of view between the British Government, the steel Commission and the steel unions. We have agreed that action under article 58 is desirable. The Germans have found this difficult, and there is to be another meeting of the Council tomorrow.

Mr. Bill Walker: Will my right hon. Friend acknowledge that a number of us on the Conservative Benches were opposed to entering the European Community, and that therefore it is right that today we should draw attention to such matters as the French cheating over the milk co-responsibility levy?

Sir I. Gilmour: I do not know whether that is right. My hon. Friend is at liberty to ask what questions he likes, but, without further elaboration, which I do not wish to press my hon. Friend to give, I am not certain what he is asking about.

Mr. Shore: The Lord Privy Seal does not seem to have taken account of the point that is being made, that both the timing of the repayments and the amount of the budget refunds are of great importance. Presumably, on the timing,


if we do not receive substantial repayments in this financial year that will make the cuts all the more severe than those so far announced.
How can the right hon. Gentleman give such a categorical commitment about the 80 per cent. repayment before the end of the financial year, when each project must be approved by the Commission and be subject to the possibility of challenge on the need, against a weighted majority vote in the Council of Ministers?

Sir I. Gilmour: It is because that is an agreement that was reached by the Council—a unanimous agreement—and I have no reason to believe that it will be broken. There is plenty of time for ample projects to be agreed and the moneys paid over before the end of the financial year. The right hon. Gentleman, with his experience of how the Community works, will know that a negative qualified majority is not very difficult to achieve.

Community Policy

Mr. Cryer: asked the Lord Privy Seal when he expects to meet other European Economic Community Ministers to discuss future planning of the Community.

Mr. Knox: asked the Lord Privy Seal when he expects to meet his European Economic Community counterparts to discuss the future development of the Community.

Mr. Renton: asked the Lord Privy Seal when he plans to meet his European Economic Community counterparts to discuss the enlargement of the Community.

Sir Ian Gilmour: The next meeting of the Foreign Affairs Council will be on 24 and 25 November, which my right hon. and noble Friend will attend. I hope to meet Community colleagues on that occasion. I expect also to attend the meeting on 16 December. The agendas for these meetings have not yet been agreed.

Mr. Cryer: When the Minister goes to the meetings, can he cast off his blinkered attitude towards the Community and accept that there are some faults? Will

he accept that many thousands of jobs are being lost in many manufacturing industries, at least in part because of cheap imports, paticularly in the textile industry? What sort of safeguards will the textile industry have against the accession of Portugal, which is currently the second largest low-cost importer into this country? Jobs are at stake. There are faults in the Community, but the right hon. Gentleman appears to go on completely oblivious of everything.

Sir I. Gilmour: That is quite untrue. Of course there are faults in the Community. No serious person has ever denied that. The hon. Gentleman will know, or should know, that in the agreement bringing Greece into the Community there is a general safeguards clause. As I have told the House before, we shall ensure that a similar safeguards clause applies to Portugal.

Mr. Knox: Will my right hon. Friend confirm that it is the intention of the Government to press for a substantial increase in the regional and social funds at these meetings?

Sir I. Gilmour: That is in general our ambition. Obviously, in any restructuring we must take account of the fact that the proportion of the budget fund that goes to agriculture is too much, particularly on the disposal of agricultural surpluses. My hon. Friend will be aware that there is a particular problem this year because of the prospect of the Community running out of own resources. There is, therefore, a limit to how much we can press in the direction he wishes.

Mrs. Dunwoody: Is it not the case that Her Majesty's Goverment have suggested that the regional fund and the social fund should be lower and that they would agree with price rises in the common agricultural fund? Does that not make nonsense of all the things that the right hon. Gentleman has said?

Sir I. Gilmour: The hon. Lady is misinformed. My hon. Friend the Financial Secretary to the Treasury pressed for an increase in the social and regional funds but when that was not possible, he rightly did not wish to hold up the adoption by the Council of the budget.

BUSINESS OF THE HOUSE

Resolved,

That, at this day's sitting, this House shall not adjourn until Mr. Speaker shall have reported the Royal Assent to any Acts which have been agreed upon by both Houses.—[Mr. Waddington.]

UNEMPLOYMENT

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]

Mr. Denis Healey: Parliament is approaching the end of its first Session under the Government of the right hon. Lady. In just 18 months she has broken every promise on which she won the last election. Her economic policy is in ruins and the price of her failure is an increase in unemployment of over 600,000 in the last 12 months while British industry, already reeling under the heaviest battering that it has suffered since the 1930s, has just published what it describes as its blackest survey ever, saying that we have not touched bottom yet, that there is a lot more bad news to come, and that it is going to get considerably worse the way things are going.
The fall in employment in Britain over the first six months of this year was over 500,000, after three years in which employment rose by 250,000. Unemployment breached the 2 million mark in August, and is increasing faster every month. The latest increase in unemployment is the highest ever recorded at 106,000. Vacancies are the lowest for 20 years. There are 250,000 men and women on short-time working or waiting for the sack. As the right hon. Gentleman the Secretary of State for Employment knows, the temporary short-time working scheme is now beginning to run out for many of those at present covered by it.
In addition, large numbers of people who have lost their jobs are not registered on the unemployment register. I gather that the Government's own assumption—I hope that the right hon. Gentleman will confirm this—is that unemployment will reach 2,800,000 next year, which is more than can be handled by the Government computers. If that prospect gives delight to some Conservative Members it does not do so to their constituents.
These figures reveal a human tragedy of a dimension that we have not known since the great slump of the 1930s. Nearly half of those out of work are under 24 years of age. A whole generation of


youngsters is being condemned to drop out of normal society, and 350,000 men and women have been out of work for over a year. There are still some Conservative Members who talk of unemployment as if it were a comfortable rest cure, but the average couple on benefit are expected to live on under £30 a week. The Government are cutting nearly £3 off the increase in unemployment benefit due next month in order to make sure that it does not match the increase in the cost of living that the Government themselves have produced over the past 12 months.
People with as little as £2,000 of redundancy pay or £2,000 in a building society will lose their right to supplementary benefit, and next year the Government are planning to abolish the earnings-related supplement. This is an appalling tally of humiliation and indignity inflicted on the British people by this Government.
The effect on our economy and, indeed, on Government financing, is equally disastrous. The present level of unemployment represents a loss to the economy of £10,000 million, which is 5 per cent. of our gross domestic product. It is equivalent to an average cut of £400 in the income of every man or woman at work today. If the economy were growing at 3 per cent., as it was in the last full year when the Labour Party was in power, instead of falling by 3 per cent., as it is falling this year, the public sector borrowing requirement to which the Conservative Party attaches so much importance, would be lower by £6,000 million.
At this time entire industries and entire regions are being smashed into ruins. Unemployment is already over 10 per cent. in Northern Ireland, in Scotland, in Northern England and in Wales. In Wales, authorities locally have estimated that it will reach 15 per cent. in two years' time and 30 per cent. in many areas of the Principality.
Firms are now collapsing all over the country. The last quarter's increase in company failures in manufacturing industry was an all-time record. The problem is not confined to the areas of traditional unemployment. The London Chamber of Commerce said last week that unless there is an immediate change in Government policy, London will face a tidal wave of bankruptcies in the coming winter. This is not, as the Government used to claim,

a shake-out of the inefficient firms. Some of the most efficient firms in the country are deeply affected.
ICI reported a loss for the first time in its history last week and is sacking 4,200 exceptionally able and dedicated men and women in its fibres division. Other efficient firms with world-wide reputations are going under. Fodens is already in the hands of the receiver, Bowaters is closing down, GKN, Lucas and Courtaulds are reporting heavy losses. The problem is not confined to manufacturing industry. The construction companies are being hit worst of all, mainly by cuts in Government spending. Distribution is equally hard hit. The profits of the big chain stores, Woolworths, Marks and Spencers and British Home Stores, have fallen heavily and 30,000 jobs have already been lost in retailing. I also remind the Prime Minister that small firms and small shopkeepers are being hit worst of all.
I wonder whether the Prime Minister has recently looked at the situation in Finchley High Street. Opposite the job-centre, which is now doing a booming trade because unemployment in Finchley has risen 70 per cent. in the last 12 months, one shop has already closed, a second closes on Saturday, and a third as soon as its closing sale is over. I expect that the owners of all these shops voted for the Prime Minister in the last election. I know that many of the firms that 1 have mentioned and many of the firms now in trouble were large contributors to the Conservative Party's funds.
We were all relieved to hear from the Prime Minister yesterday that she has now withdrawn the letter that attempted to blackmail the companies receiving Government aid into subscribing to the Tory Party. I ask her whether she will now complete the good work by returning the money subscribed to her at the last general election by Bowaters, Lucas, GKN, Fodens, Wimpeys, Taylor Woodrow, and the hundreds of other firms of which I shall be glad to give her a list under sealed cover after the debate.
The plain fact is that British industry is now facing the most daunting prospect since the early 'thirties. Why does it face that prospect? It is not because of the world slump—exports are only just beginning to fall. It is not because of excessive wage increases. The Financial


Secretary published in the Treasury's economic report in August the view that unemployment would increase if wage increases were higher than the increase in the money supply. They have not been so in the last 12 months, have they, Mr. Speaker?—or is it unfair to ask you that question? The Financial Secretary will be able to tell you, Mr. Speaker, that in the last 12 months the increase in earnings was about the same as the increase in the growth of money supply. It was much lower in the manufacturing industry, which has been hit by the closures that I have mentioned.
British industry is facing that daunting prospect not because of the increase in oil prices. Among industrial countries Britain is deriving great benefit from the increase in oil prices, because Britain is now self-sufficient in oil. It is adding about 5 per cent. to our gross domestic product. It is giving us the benefit of about £4 billion in public revenue. It means that Britain is the only industrial country in the world, apart from Norway, that can look forward to a surplus on its current account in the present year.
No, Mr. Speaker, the industrial reality and the outlook that I have described are direct consequences of Government policy. First, we are experiencing the most savage deflation of demand since the war. The Government decided at the beginning of this year, contrary to their election promises, to increase the burden of taxation by £3,650 million. They decided to cut public expenditure by £5,000 million. On top of that, the collapse in public confidence in the country's economic future has led to the savings ratio rising to 15 per cent. of income. Every 1 per cent. increase in the savings ratio is equal to a fiscal deflation of £2,000 million. In other words, as a direct consequence of Government actions there has been a reduction of about £15 billion in demand in the current year.
On top of that savage fiscal deflation the situation has been made infinitely worse by a monetary policy that is far too strict. It sets a target that is only half as high as the increase in inflation engendered by the Government. It is a monetary policy that has been pursued

with an incompetence unparalled in the world.
The Chancellor of the Exchequer has tried to control the money supply through interest rates alone. However, excessive interest rates have not reduced company borrowing, which was the Government's intention according to the Chancellor when he introduced the rates nearly 12 months ago. On the contrary, company borrowing is still at an all-time high. The only effect of the excessive interest rates is that companies have had to borrow more to finance their existing debt. We have offered foreign speculators a bonanza at the expense of the British taxpayer. About £4,000 million of hot money flowed into Britain in the past 12 months. That has been the main factor in pushing up the value of the pound. It has risen by 30 per cent. compared with the average of other currencies over the past 12 months.
I have been pointing that out to the Government all year. The Bank of England points it out in its latest edition of the Bulletin. The CBI has followed suit. In its survey published today the CBI states:
The relative unit cost competitiveness of British industry is 60 per cent. worse now than it was in 1975.
As a result, Sir Terry Beckett said yesterday that industry was going right down the nick. Sir Maurice Hodgson, the head of ICI, last week said that he believed in a bracing monetary climate but that British industry was now "freezing to death".
The Government claim that all this is just the painful price that inevitably must be paid for bringing inflation down by controlling the growth of money. The Government have pointed to the recent fall in inflation as evidence that their policy is working, but if the Government's arguments are right and there is an 18-month to 24-month gap between a change in the growth of money and a consequence on prices, the fall in inflation this summer is due to the last Government's monetary policy and not to this Government's monetary policy.
More than that, this Government have made a total shambles of their monetary policy. The Chancellor finally admitted to the Select Committee on Monday that


sterling M3 has been growing at 19 per cent. since February—over twice the target of 9 per cent. set by the Financial Secretary when he addressed the House some months ago. If the Government are right in their arguments, we must face an immense increase in inflation some time next year as a consequence of their monetary incompetence this year.
I read in the newspapers that the Prime Minister is "very, very sorry" about all this. In fact, I gather that she has been in quite a bate. Her personal style as Prime Minister, as we all know, has been distinguished by a remarkable disloyalty to her colleagues, as the right hon. Member for Lowestoft (Mr. Prior) will be the first to testify. I am glad to see that many of her Cabinet colleagues are now flattering her by imitating her disloyalty. There was a lovely example of that by the hon. Member for Cambridge (Mr. Rhodes James) in a speech yesterday. I can see why the Leader of the House is looking so nervous he thought that I was about to refer to him.
The Prime Minister has been putting it about that the collapse of her monetary policy is all the fault of the Governor of the Bank of England. Apparently, everybody is to blame but she. However, it was she who authorised the 8 per cent. increase in the retail price index—for which the Government are directly responsible—over the last 12 months, which has been reflected in the biggest increase in earnings for six years. It was she who abolished the exchange control, although the Bank of England must have warned her that that would mean saying "goodbye" to control of the money supply, because British banks have been lending furiously to British firms through their subsidiaries abroad.
It was the Prime Minister who abolished the corset and therefore freed for the banks a new way of avoiding monetary control by round-tripping, thus pushing up the money supply and attracting even more foreign inflows, which are pushing up sterling still further. I suspect that the Bank of England warned her against all these steps but with her usual self-confident pigheadedness she preferred to rely on the stumble-bums in the Treasury. She ignored all the advice that she received from the Bank. If the Bank of England is at fault in this lament-

able story, it is in relying on the last Conservative Government's introduction of the ill-famed competition and credit control policy instead of taking direct control of bank lending, as happens in all the countries that successfully control the supply of money.
The Prime Minister herself was responsible for the public expenditure cuts, which relied largely on cutting the orders to private industry for capital equipment or increases in nationalised industry prices. Mr. Harvey Jones, of ICI, told us last week:
Every single one of our costs"—
he was referring to his firm—
that can be affected by Government is higher than in continental Europe.
To take just one example, British industry is having to pay more for its industrial gas than industry anywhere else in the world-18 per cent. more than Germany, 47 per cent. more than France and 108 per cent. more than the United States. That is the main reason why Bowaters is bust.
Surprisingly, the Conservative Party has been standing market economics on its head. It has been using cash limits in the nationalised industries to ensure that they raise the prices of their products when the demand for them is falling. That is why we shall suffer a 14p first-class letter post in a month or so and why British Rail fares will go up by 19 per cent. by the end of the year.
Everything that I have so far described, which is responsible for what has happened so far, is nothing compared to what is to come next year, as Sir Terry Beckett pointed out in his introduction of the last CBI survey. Next year we face the collapse in exports that has been so slow to come. Next year we shall face a 10 per cent. collapse in investment, after three years in which investment, particularly in private manufacturing industry, has been rising at unprecedented levels. Next year, also, we shall face a collapse in retail sales that will be all the more severe if the Government are successful in the compulsory pay policy that they are introducing in the public sector.
Two questions have been asked in the past week or two, and they have not been answered. I hope that we shall get answers from the Government this evening. First,


Sir Terry Beckett, the head of the CBI—the employers' organisation—asked yesterday whether we have to go through the next three or four years destroying great tracts of British industry. We want a reply to that question, too. The other question was asked by the head of the trade union movement, Mr. Len Murray, of the Prime Minister personally in Downing Street the other day: is there any level of unemployment that the Government would consider too high? We want an answer to that question, particularly from the Secretary of State for Employment.
The biggest problem that the country risks facing unless there is an immediate reversal of policy is that when recovery comes—and we may have to wait for the next Labour Government before it does—those parts of our manufacturing industry that have survived the Prime Minister's holocaust will have carried out no investment and no industrial training for five years. We shall therefore face the possibility of recovery with an industry that has clamed-out machinery and lacks the skills that will be essential then to respond to demand. That is why it is essential that the Government should reverse their policy now. Every week's delay is pushing British industry further towards terminal decline.

Mr. John Bruce-Gardyne: rose——

Mr. Healey: I will not give way.

Mr. Bruce-Gardyne: rose——

Mr. Speaker: Order. It is quite clear that the right hon. Gentleman is not giving way.

Mr. Healey: There is no answer to our economic problems today that does not involve a U-turn by the Government. The Prime Minister is so far off course that she will have to do a U-turn even to get herself back on the course that she set herself earlier in the year. I shall tell the right hon. Lady what is needed, and I think that there will be wide agreement between both sides of the House on what I have to say.
First, at least £400 million is needed to alleviate the immediate impact of unemployment. The TUC and the Labour

Party have both put forward specific proposals for short-term alleviating measures in this area. I isolate two of them as being by far the most important. I hope that the Secretary of State for Employment will be able to tell us tonight that he has persuaded his colleagues to give him enough money to do two things. The first is to fulfil the promise that was carried out by the last Labour Government to offer every school leaver a job or job training by the Easter after leaving school. Secondly—this has now become equally important—there must be a similar offer of a job or job training to every man or woman who has been out of work for more than 12 months.
Further—there is wide agreement on this—there must be an immediate cut in interest rates of at least 4 per cent. Most City advisers whom the Prime Minister may have drawn to her attention are now agreeing that that is likely to have no effect on increasing the money supply, but it may have a healthy effect in producing a fall in the value of sterling.
Next, we must have reflation. The savage deflation from which Britain is now suffering is only made worse by every aspect of the Government's present policy. We must make good the shortfall in demand, especially when the saving ratio is now as high as 15 per cent. The Government must borrow from that money and feed it back in industrial aid, in cuts in indirect taxes, and in assistance to the under-privileged.
This will not upset the money supply. The London Business School pointed that out earlier this year, and it provided the Chancellor, I think, with his first economic adviser. I must, with respect, tell the Prime Minister that such a move will not prevent the institutions from lending to industry. The appalling thing about the abolition of exchange control, as revealed in the figures this week, is that the financial institutions have been buying more equities abroad than they have been buying in Britain in the past 12 months.
The next thing that the Government must do is to channel North Sea oil revenues—£4 billion this year—into industrial investment, infrastructure and industrial training instead of allowing them all to pour down the drain in financing unemployment.

Mr. Gordon Wilson: Will the right hon. Gentleman give way?

Mr. Healey: No.

Mr. Wilson: rose——

Mr. Speaker: Order. There is no advantage to be gained in the hon. Gentleman's remaining standing when it is clear that the right hon. Gentleman is not giving way.

Mr. Healey: I put my final point urgently to the Government, and I know that the Secretary of State may have some sympathy for what I shall say. They must start serious talks—negotiations—with the CBI and the TUC about actions that will help to reduce costs through higher productivity and will produce a more sensible approach to the problems of pay and prices. The right hon. Lady has met the TUC, but only to abuse and insult it.
The sort of approach that I have suggested is one that any previous Conservative Government facing these problems would have adopted, as Mr. Macmillan made clear on television the other day, and as the right hon. Member for Sidcup (Mr. Heath) would no doubt confirm. However, the Government are planning to do exactly the opposite. We understand that there is a great crunch meeting of the Cabinet tomorrow morning. The Prime Minister appears determined to stick to the policies that have collapsed around her. She seems determined to try to make something of the ruins of that ridiculous medium-term financial strategy that the Chancellor of the Exchequer unveiled to the House, to such derision, in his speech on the Budget. She seems determined to try to make good the increase in the public sector borrowing requirement, which is due entirely to the fall in output and the increase in unemployment.
There is no way of cutting public expenditure by the £2 billion that is talked of which will not hurt industry even more and drive up unemployment even higher. The reduction in demand will do that, however it is achieved. If it is done through capital cuts, as has happened so often in the past, it will fall very heavily on private industry, particularly in construction. If the Prime Minister does it through nationalised industry price increases it will directly add again to industrial costs. If she follows the

advice of the ineffable right hon. Member for Daventry (Mr. Prentice) and goes for the social services she will be inflicting needless suffering on those who are not able to help themselves.
I read in The Daily Telegraph this week that one of the Prime Minister's Cabinet colleagues described her present policy as the economics of the madhouse. It also represents the social morality of the Victorian poorhouse. I hope that there are enough hon. Members on both sides of the House who take seriously the future of Britain's industry and economy, and who will join the Opposition tonight when we vote against the Adjournment motion.

4 pm

The Chancellor of the Exchequer (Sir Geoffrey Howe): The House has listened to the speech of the right hon. Member for Leeds, East (Mr. Healey) without overwhelming enthusiasm from either side. We should regard it as the opening step in his campaign for the leadership of the Labour Party. Those of us who naturally take an interest in that position find it difficult to determine the terms and conditions on which the local, acting, temporary leadership of the Labour Party will be available. On present form the occupant of that position seems likely to have about as much authority as the doorkeeper of Congress House, and as much job security as the chairman of Westward Television.
The right hon. Gentleman has some qualifications for the job. Like his immediate predecessor, he is the owner of an ample mansion in Sussex—[Interruption.]

Mr. Speaker: Order. I hope that the debate can now continue.

Sir G. Howe: Like his immediate predecessor, the right hon. Gentleman spent a great deal of his time in office helping the International Monetary Fund with its inquiries. As we know, he is a man of sufficient intelligence to disagree with almost every decision of his party conference and with every decision of its national executive, but he is very reluctant to admit that in public. His speech today was in line with that character.
The debate proceeds on the common grounds of deep concern on both sides of the House about unemployment and the recognition of the real difficulties that face


much of industry, with the knowledge of the problems that are especially intractable for businesses that face foreign competition at home or abroad. There is common ground also in our concern about individuals and communities that suffer from those problems.
If we are together to improve the prospect, it is of the utmost importance not to overlook two matters. First, the problems are in no way unique to Britain. Secondly, responsibility for these conditions cannot be laid exclusively at the door of Governments of either party. [Interruption.] Opposition Members may choose to disregard that, but throughout the industrial world recession is marching ahead. The average rate of inflation in the main industrial countries, excluding Britain, has doubled since 1978. In the seven major countries, again excluding Britain, unemployment has risen by 2·3 million during the past 18 months. For the same industrial countries in the year towards which we are now moving there is the prospect of no more than 1 per cent. growth at best. In the United States—still a major part of the world market—output last year was down by 11 per cent. Even in Germany, the major industrial partner in Europe, output is expected to decline by about 1 per cent. in the first half of next year. All those things are symptomatic and symbolic of the troubles afflicting not only Britain, but the whole of the industrial world.
Whatever the right hon. Gentleman may say, I do not argue that those problems are all the fault of the Opposition. Anyone who takes an objective view knows that much of industry in Britain has been failing to match the improvements in productivity that have been achieved elsewhere. Over the years industry has become less and less competitive. For example, during the three years to 1979, when the overseas markets for motor cars was buoyant, registrations for new cars in Britain rose by one-third, but the output of cars in the United Kingdom dropped by one-fifth. The Labour Party came into office in 1974 with unemployment standing at 575,000. By the time it left office, unemployment stood at 1·3 million—well over double the figure of 1974. The Opposition have very little cause for complacency and no cause whatsoever for conceit. I have illustrated two

causes of Britain's present difficulties—each of great importance and far from easy to remedy, except over a significant period.
The right hon. Gentleman argued that the Government could determine one cause of our difficulties, namely, the exchange rate. I know that a number of my hon. Friends are concerned about that. There are three things to be said about that matter. First, although the problems posed for some businesses by the high exchange rate are real, we should not overlook the fact that it is not all bad. The present level of the £ sterling keeps down the price of many raw materials. It is worth remembering that our problems were not made significantly easier when the right hon. Gentleman found himself treating our problems by means of opposite prescription—massive depreciation. Even so, the present level of the £ sterling is not an objective of policy. The right hon. Gentleman may well laugh. As he should know, the reasons underlying the present level of the exchange rate are more complex than might be thought. Of course, the level of interest rates attracts inflows to some extent. But I am not aware——

Mr. Geoffrey Rippon: Will my right hon. and learned Friend at least agree that the record level of the minimum lending rate has a significant effect on the exchange rate? Will he indicate how high the money supply must rise before he will consider reducing the minimum lending rate?

Sir G. Howe: I have already acknowledged that the level of interest rates has the effect of attracting inflows to some extent. But if we look more widely than that, it is difficult to find any commentator who can explain the high sterling as being predominantly due to that influence. As my right hon. and learned Friend must have witnessed, the upward climb of the £ sterling during the past 18 months has pretty consistently exceeded the forecasts and expectations of most commentators.
Experience surely suggests that, however much we may like to think the opposite, it is self-sufficiency in oil, the rising real price of oil and conditions in the Middle East which are undoubtedly the most potent real influences on the present level of the pound sterling. However


much one would like to conclude in the opposite sense, there are no grounds for confident belief that the Government can exercise great influence on the exchange rate, still less on all the other factors which make up the word "competitiveness". It is prudent not to assume that lower interest rates, which are certainly the objects of our strategy, will make a dramatic difference in that respect.

Mr. Peter Tapsell: rose—

Sir G. Howe: Perhaps I may be allowed to deal further with this point.
It is also prudent to be very careful about international parallels which may well be drawn in the debate—for example, with Germany and Switzerland when their currencies were under upward pressure. It is by no means clear that measures to control inflows in those countries were more than marginally effective, and then only for a short period. Nor should we ignore the price paid in higher inflation, for example, by the Swiss when controls had not achieved their objects and they abandoned monetary targets for a time. The right hon. Member for Leeds, East should know this from his own experience, because in 1977 interest rates were dramatically reduced and there was massive intervention to hold down the sterling exchange rate. However, in the end, none of that worked and he was forced to let the rate rise. In due course, interest rates rose as well.
Of course I appreciate the concern of my right hon. and learned Friend the Member for Hexham (Mr. Rippon) about the possible effect not only on exchange rate but in other directions, of higher interest rates, which are a real burden. The level is a function of past inflation and of the policies that must be followed to reduce it. In an economy of any complexity, the price of money—the interest rate payable—is inevitably a fundamental instrument of monetary control, and direct controls, as we have seen from experience of the corset introduced by the right hon. Gentleman, distort but do not control. All this should be familiar to the right hon. Gentleman because he has long recognised

Mr. Tapsell: While no one has ever suggested that the level of interest rates is the sole determinant of an exchange rate, does not my right hon. and learned

Friend agree that, if MLR in this country was 2 per cent. below the prime rate of the United States rather than 2 per cent. above it, it would have a most helpful effect on the exchange rate? Most people in the City of London do not think that that would have a damaging effect on the money supply. It might positively help him in his problem of reducing bank lending.

Sir G. Howe: I can see the force of my hon. Friend's point as a proposition. However, our experience is that even when the American prime rate was ahead of us the £ sterling continued to appreciate. The other feature that one must remember is that one must compare the prime rate, or the equivalent rate in any country, with the level of inflation in that country, anticipated, actual or that which has just taken place. If one compares the interest rate in this country with the level of inflation, it is still barely positive, and, if one looks at the United States, one finds that their interest rate at a shade under 13 per cent. is comparable with ours in exactly the same sense. If one compares lower interest rates in other countries with the level of inflation in those countries, one finds that the interest rate is comparable with the level of inflation.
The truth is, as the right hon. Member for Leeds, East said, that the need for monetary control is inescapable. As he said in the House three years ago,
we cannot master inflation unless we have control of the money supply"—
I am quoting not from any doctrinaire author but from the speech of the right hon. Gentleman—
… no responsible Government could shirk their duty for maintaining firm control over the supply of money and using the necessary fiscal and monetary instruments for that purpose."—[Official Report, 20 July 1977: Vol. 935, c. 1726–31.]
From the right hon. Gentleman's speech, one is not clear whether he thinks that our monetary policy is. or has been, too lax or too tight. In the Budget debate earlier this year, he argued that the monetary policy which we were pursuing was too tight. But as the summer went on he began to argue in precisely the opposite sense. Today he argued in both senses at the same time.

Mr. Healey: Perhaps I can repeat what I said when the right hon. and learned


Gentleman raised this matter last time. 1 said that the policy was far too strict and that it had been pursued with unparalleled incompetence. The result is that the Chancellor has come out at double his target rate. That is a simple point to make, and everyone in the City knows it.

Sir G. Howe: The right hon. Gentleman still declines to address himself to the question. Is he or is he not arguing that the rate of monetary growth is too tight or too slack? When he thought, as did all commentators, in the earlier part of the year that the monetary growth rate was running at the predicted level, he argued that our monetary policies were too tight. But when he now finds, as a result of the removal of the corset which he put in place and which created the distortions, that the monetary growth rate is faster than that, he argues that it is too slack. Yet he reserves the right at the same time to continue to argue that it is too tight. It is a characteristic attempt to present the case in both ways.
I have no doubt that we have created the conditions that are necessary for slowing the rate of monetary growth. We shall be deciding on the rolling forward of the monetary targets in due course when more information is to hand. We shall be making announcements in due course on the prospect of monetary base control. As I have told Committees of the House already, we expect public sector borrowing and bank lending to abate in the second half of this financial year, and we are looking at further ways of securing more finance directly from the personal sector. It is for that reason that we shall have a substantial new issue of so-called "granny bonds" available on 17 November.
I reaffirm our commitment to the principles of our financial strategy as a means of conquering inflation and permitting sustainable growth. The object of that policy is the defeat of inflation, and it would be total folly to abandon that policy when it was beginning to produce results.
When we came into office, inflation was on a rising trend. The price index had been showing increases in annual rate month after month from October 1978 onwards, and it was rising sharply at the time of the election in May 1979. Now it

is back to a falling trend. If the right hon. Gentleman, again characteristically, seeks to take credit for that, he must take the blame for the rise that intervened. In fact, the September RPI figures showed a fall in the annual rate for the fourth month running—six points lower than in May. Wholesale input prices are scarcely growing. House prices are flat, and the increase in retail prices has been well below 1 per cent. in each of the last five months.
Of course, it is clear that this sustenance of the battle against inflation involves substantial and painful adjustments. It is important to spread the burden of adjustment as fairly as we can. I agree with all those, notably the CBI, which has so often been quoted by the right hon. Gentleman, that it is of crucial importance to restrain central and local government spending in order to ease the burden that that spending represents on industry.

Mr. Dick Douglas: Has the right hon. and learned Gentleman noticed that the Scottish Council for the Care of Spastics has had to sell its investments in order to pay for the Government's incompetent policy? Does he consider that to be spreading the burden fairly?

Sir G. Howe: We are all concerned about the Scottish Council for the Care of Spastics, but I cannot comment on a particular disposal of shareholdings by a particular organisation.
The reality is that industry, and the private sector in particular, is finding the burden imposed upon it sharply increased by the costs of central and local government, not least by the costs of industrial rates on industry, which is one aspect of the costs of local government. The achievement of sufficient and effective control of public borrowing will permit lower interest rates while meeting the necessary monetary objectives.
When in power, the Labour Party recognised as part of the policy to achieve these things the importance of restraining public expenditure. But today the right hon. Gentleman has argued simultaneously the case for lower interest rates and a substantially higher public sector borrowing requirement. That combination


is quite unattainable. As the right hon. Gentleman said in December 1976, under the surveillance of the International Monetary Fund,
failure to take measures to reduce our public sector borrowing requirement to the extent to which we have reduced it would have had effects on inflation and employment far more severe than anything
attributable
to the measures that I have announced this afternoon."—[Official Report, 15 December 1976; Vol. 922, c. 1555.]

Mr. Clinton Davis: Will the right hon. and learned Gentleman give way?

Sir G. Howe: No, I am sorry. I have already given way more times than the right hon. Member for Leeds, East.
It is that policy—the containment and control of public spending—that industry in this country also wants. The CBI, which the right hon. Gentleman quoted so often, is certainly not urging us towards the abandonment of our policies to defeat inflation. The director-general of the CBI said last month:
They cannot bring down interest rates until they control public expenditure.
He was right, and it is to that that we are committed.
For those reasons, we have set out the path for the reduction of public spending, in real terms and as a share of the GDP. We shall maintain that overall strategy. As is usual at this time of the year, we are reviewing the pattern of public spending, and inevitably there are some shifts to reflect changing circumstances. But when that has been undertaken the fact remains——

Mr. Andrew Faulds: On a point of order, Mr. Speaker. When will the right hon. and learned Gentleman, who is boring his colleagues into somnolence, turn to the subject of the debate—unemployment?

Mr. Speaker: The hon. Gentleman knows that that is not a point of order.

Sir G. Howe: The fact is that one of the features that is most relevant to the containment of unemployment is the burden of the pattern of public expenditure. All public expenditure must be paid for by taxation and borrowing, and we must take account of that when we consider the shape of it. For us all, that arithmetic

is inescapable. For that reason, we have agreed to and will take action to keep the public sector borrowing requirement under control, next year as well as this year.

Mr. Dennis Skinner: Regarding the question of arithmetic and the public sector borrowing requirement, which is very much in the Government's mind, as the right hon. and learned Gentleman constantly tells us, how does he reconcile the fact that the Minister of Agriculture said, a few months ago, that it cost £7 billion a year to finance the dole queue when there were F6 million people out of work—it is suggested that the figure, when updated, could be about El 0 billion a year, probably as much as the public sector borrowing requirement—with the Government's inability to tell us how much further they are prepared to allow unemployment to rise and so swallow up more thousands of millions of pounds of the taxpayers' money?

Sir G. Howe: The growth of the public sector borrowing requirement is being curtailed by present policies. The experience of the previous Labour Government shows that clearly. Under that Government, unemployment rose steadily and remorselessly until the moment came when they achieved control of public sector borrowing. It was only when control was taken—from 1977 onwards, when public sector borrowing came under the control prescribed by the International Monetary Fund—that unemployment under the previous Labour Government began to fall. The point made by the hon. Member for Bolsover (Mr. Skinner) is sometimes advanced as a reason for failing to control public spending. It was that very argument that misled his Government for so long.
As I said, following the IMF measures announced in 1976, in 1977–78 public expenditure was 8·6 per cent. below the level that had been planned in February 1976. If we compare spending after the application of the IMF prescription with spending in 1976–77, we find that there was a reduction of more than £4 billion. It was at that time, for the first time in the Labour Government's term of office, that unemployment began to fall. That is the reason for the directness of the


link between the control of public expenditure and the problem of unemployment.
There are other things that industry wants. Industry wants, and we have given it, the removal of unnecessary controls and restriction of opportunities. The House will recall that, when the Prime Minister announced the location of the first seven enterprise zones, she said that further sites would be announced in the North and in the Midlands. A decision on the site in the North will be taken shortly. Meanwhile, I am able to announce today that, following a recommendation by my right hon. Friend the Secretary of State for the Environment, we have chosen two possible new sites in Dudley and Corby. Both sites are in areas where their value will be considerable. By reducing the burdens on business. their creation will help to bring much-needed jobs and investment to those towns.
There is one other factor that is of importance in relation to the present unemployment—the level of pay that has been and still is being paid in some places. We are still paying today the price, in the level of unemployment, for pay increases far in excess of the growth in productivity over a number of years. In the last pay round, earnings were up by 22 per cent. while output was down by 2 per cent. At the same time, in most of our major competitor countries earnings were rising in single figures. It is that growth in earnings on an excessive scale that has had an unfavourable impact on profits and profitability and has helped to destroy investment. competitiveness and jobs. In that sense, as we were told by NEDC recently, pay and the growth of pay can have a greater impact on jobs than interest rates. CBI economists said that in the economy as a whole 1 per cent. less in pay increases had three times as large an effect on profits, and so on jobs, as a 1 per cent. cut in interest rates.
The continued growth in pay ahead of productivity is an important aspect of the long-term decline in competitiveness, which we must reverse. The same discussion at NEDC offered a comparison of unit labour cost in manufacturing with most of our main competitors in world

markets. The right hon. Member for Leeds, East also quoted those figures in his speech. The suggested average level in the second quarter of this year, compared with the level of 1976, was 70 per cent. higher in this country than in our competitor countries. The CBI document said:
Although the appreciation of sterling has exacerbated the problem, the major cause of our loss of competitiveness has been our very poor pay and productivity performance.
That is the reality with which people in this country must come to terms, and of which we must remind them constantly. It is up to the pay bargainers on both sides of industry to take account of the employment consequences of the bargains that they strike. There is every reason to welcome the growing mood of realism in that respect and move towards lower pay settlements and a substantial reduction in strikes—fewer in the last three months than in any three-month period during the last 30 years. All those factors can contribute enormously to the prospect of reducing unemployment and restoring prosperity in this country.
We cannot control public spending unless the Government control public sector pay, and that we must do. There is no question of victimising those in public services who give loyal and valuable service to the community. But when much of the private sector is accepting very modest pay rises, that should and must be reflected elsewhere in the labour market. Pay rises in the public services must be sharply lower than in the past year. In August the Lord President of the Council told the trade unions in the public sector that cash limits would be the main determinant of settlements in the year ahead. Hence the decision this week to suspend the Civil Service pay agreement, and with it the operation of pay research. That decision reflects our determination that cash limits should be the ruling factor in settling pay in the public services.
Nationalised industries must also play their part. The steel industry already demonstrates that the public sector is no exception to the rule that high pay awards cost jobs. That is the crucial importance of the link between the policies that I have outlined and the problem of


unemployment with which this debate is concerned.
Of course, it is natural that there should be deep concern in the House and throughout the country at a time of rising unemployment and the severe pressures on industry to which I have referred. But the Government will be adhering to their policies, not out of any sense of obstinacy or unawareness of the problems but because we have no doubt that those policies are right. The temptation, when the going becomes more difficult to do something new for the sake of doing something new, however inappropriate, to demonstrate concern is one to which one ought not to succumb. It is precisely because we care about the problem touched on in this debate that we shall stand by the policies and offer the only way for this country to make its way back to economic prosperity.

Mr. Tony Benn: I think that the kindest thing that I can say to the Chancellor is that, whatever the merits of his policy, he found it difficult to put them into words. If I were a supporter of the Government, I would be deeply anxious to think that the best justification for what is happening is to be found in a study of today's Hansard; for, frankly, the Chancellor bombarded the House with jargon, like a lawyer who had read a late brief, and did not convince the House, nor, I suspect, his own colleagues, that what he said justified what was happening.
This is an almost unprecedented economic debate in the House. In 30 years in Parliament next month, I do not recall an occasion on which a Government have not only lost, at one and the same time, the support of the TUC—and one would not expect the TUC to support this Government—but have also forfeited the confidence of the Confederation of British Industry. The right hon. and learned Gentleman's supporters must know, even though he does not want to admit it, that a divergence as wide as there now is between the Front Bench and the CBI, coupled with a very deep anxiety among the people of this country, makes this debate unique in the post-war annals of the House of Commons.
The reason for this is that we are discussing an unfolding tragedy of enormous human significance. Maybe London Mem-

bers are not aware of what is happening in South Wales, where the whole economy is being threatened, or in Merseyside, in Clydeside, in the North-East, or even in parts of London, where unemployment is now over 10 per cent. It is that tragedy that the House requires the Government to consider. It is quite clear that they do not intend to change their policies.
I must take seriously what the Prime Minister said at the Conservative Party conference. She said that she would not change her policy, and I believe that the whole House must take that seriously. I do not believe that hers is an economic strategy; I believe that it is a political strategy to break the power of organised labour, to permit the reconstruction of a society in which employees are reduced to the sort of serfdom that is now appearing. [Interruption.] Oh, yes, it is. Anyone who thinks that when those ICI workers are laid off, without any consultation, they are not being reduced from people full of the skill and pride that goes with working in a successful firm into a form of serfdom under which they have to accept the sack, anyone who misunderstands that, does not understand what is happening.
It is a political strategy that is being followed. Therefore, we should not devote too much time to the possibility of a U-turn, because the real problem facing the House and the country today is that a U-turn, even if it were made, would not help. If there were a change of Prime Minister from the present Prime Minister to the present Secretary of State for Employment or to the Home Secretary, it would not help. If the right hon. Member for Sidcup (Mr. Heath) were brought back into the Government—as many of his party wish he were—to introduce his experience, it would not help. If the Liberal Party were brought into a Lib-Conservative alliance, it would not help. I go further and say that if—[Interruption]. I might add that the experience of the previous Labour Government, who did their best, would not help. No one can deny that they did their best to protect people from the impact of the world slump, but they fell foul of the International Monetary Fund, which the Chancellor lauded, but which, by its imposed prescription upon the Labour Government, contributed something to the problems that he has inherited.

Mr. Peter Hordern: Will the right hon. Gentleman give way?

Mr. Benn: Perhaps I may be allowed to develop the argument a little further.
Therefore, I suggest that we shall waste some time in the House this afternoon if we devote ourselves to the sort of party argument that has often characterised these debates. I believe that what we must do now, and what the country would expect, particularly after reading the Chancellor's speech, is to look beyond the life of the present Government to the broken-backed economy that will await an incoming fresh Labour Government. There is no doubt whatever that that economy will be broken-backed. If pay is held down, that will worsen the situation and not improve it. I turn my mind to an old phrase and reformulate it: "One firm's pay settlement is another firm's order book". If one cuts wages, one is cutting the demand for other firms. When the engineering workers are asked to take 8 per cent. when inflation is at 16 per cent., those engineering workers will not be able to afford to buy the new Mini-Metro, or artificial fibres from ICI. So let us look at the matter in a different and more serious way.
There will be factories that are closed by this Government. Their equipment is now being sold off by liquidators to our foreign competitors—fine new equipment as well as the old stuff which should have been replaced years ago. Workers now have to watch the equipment that they have built by the work which they have done, made out of the profits that they have created for their employers, while that equipment is sold to their foreign competitors to manufacture goods which will come back into this country in the form of imports.
I believe—and I do not think that I am exaggerating—that an incoming Labour Government will find a situation graver than that in 1945. Hitler bombed the factories, and we kept them going with day-to-day repairs. When the Secretary of State for Industry closes the factories, they will be scrap metal. There will not be 3 million Service men waiting as then to be demobilised, but 3 million demoralised unemployed who will not have worked for years and will find that the places of work which they left are

no longer available to allow them, or the nation, to earn a living. Regions and localities will be destroyed. Industries will be undermined. We shall have to face a problem of recovery which will be much longer and much harder than most people yet appreciate.
I want to turn my mind to what we should now be doing as a House of Commons. I speak mainly to those who share this analysis of how we should try to resolve this situation. First of all, Parliament should support those who are resisting the closure of their factories. When I see steel workers or engineering workers fighting to prevent their employers closing their factories, in my eyes they are defending our industrial heritage and our future in this country, and the House should give them sustained support.
Secondly, there will have to be an enormous public investment in industry in order to deal with the backlog of investment neglect and the present vacuum of investment created by Government policy. If anyone thinks that we are ever going back to the old bribery by the taxpayer to make it work, I ask him to take one example alone. I looked this up the other day. In 1968, as Minister of Technology, I brought before Parliament, and it was approved, a Bill to provide public money to finish the QE2. Now Lord Matthews, who owns it, threatens to sell that ship which he does not really own—because it was bought with public money—as a way of threatening the National Union of Seamen, whose only offence is to try to keep the British merchant fleet under the British flag.
I do not believe that the British people will ever go back to the attempt to bribe and bully business men to invest in the public interest. That is why I do not believe that the U-turn would be relevant.
Next, we must plan our trade. It does not make sense, for even this Government, to put in money for the Mini-Metro, through British Leyland under the National Enterprise Board, and then allow the British motor car industry to be destroyed by imports, as it will be if action is not taken. Once British Leyland goes, why should Ford and General Motors, or Talbot, stay in this country? They are here because British Leyland is here, and if British Leyland goes they


will go. That will create another 1 million unemployed in our country.
We must control capital movements so that profits made in Britain, by British workers, are not exported to countries where trade unions are illegal to produce goods at lower cost to come back to Britain to undercut the living standards of those who created the wealth. We must expand the public services with money from oil revenues and from reductions in defence spending to ensure that Britain has something to defend by way of an industrial base. When I went round the world for over four years as an energy Minister I found that there was not an oil-producing country that did not tell me that it was using oil revenues to build an industrial base so that when the oil ran out it would have something on which to live. We are the only country that is using oil wealth to destroy our industrial base by bringing a flood of imports into Britain.
We want a shorter working week so that new technology shares its benefits among the community instead of having half on overtime and half unemployed. We want earlier retirement and expanded training and retraining. If we are to do that, we must get back to the House of Commons the powers that we ceded to the Common Market, which would make the policy that I have described illegal in the eyes of Community law. The preparatory work must be set in hand at once.
I believe—I hope that my trade union friends—

Mr. J. Enoch Powell: The right hon. Gentleman is very generous in giving way. He has appealed to the House of Commons, rightly, for it is the only legal source of finance in this country, to provide money in large quantities for a series of purposes that he has set out. Is that money to be raised by taxation, is it to be borrowed, or is it to be printed?

Mr. Benn: The right hon. Gentleman is the grandfather of the disaster that now confronts Britain. In the 1930s in similar circumstances massive public expenditure on rearmament brought the capitalist world to full employment. The challenge to this generation is how to do it without rearmament and war. That pre-war full

employment, even created by rearmament, was self-financing. The £10 billion that we now lose in lost production and the £7 billion that we pay in public expenditure in the form of benefits would both be recovered. Both those weights upon our economy would be removed by a return to full employment which should be funded, I believe, by investment in industry and the expansion of our public services.
A great deal of industrial planning has now to be undertaken by the trade unions in industry. It is no use saying to the trade union movement that it should continue pleading over tea at No. 10 Downing Street with a victorious Prime Minister that her policy is causing hardship. It is intended to cause hardship. The trade union movement at national level, regional level and plant level would be better advised to work out the plans now for the recovery of their industries. That is true of regional and local planning. Labour local authorities with the trade unions and local business men would be better employed now in planning the development of their own immediate economies to deal with the tragedy of a Consett, a Corby, a Llanwern or a Port Talbot, which cannot be dealt with by an incoming Government with only the help of the Civil Service in Whitehall.
It is the role and purpose of my hon. Friends to develop ways of implementing these policies. We cannot wait until the moment comes when there is a change of Government and responsibility rests upon us. We must develop the machinery of government and the policies for implementation that will breathe life into an alternative future for Britain so that we do not campaign only against the Government—which is right and proper—but for something that makes more sense for our people.
I do not believe that the Government can succeed. Their philosophy and their values do not accord with those that we in Britain have developed over centuries. The Government's only real constituency is sitting in the Press Gallery. If it were not for Fleet Street the unintelligibility of the Chancellor, or the amorality of the Government's policy, would become apparent within days to the British people. It is not possible to govern this country with only the constituency of Fleet Street to act as a support. When


the British people realise that they are being invited to destroy their own economy, their society and the values in which they believe, including their responsibilities to their fellow men and women, they will turn to us. When they do that—may it be soon—I plead with my hon. Friends to ensure that we are ready with real, relevant and fundamental reforms to meet the needs of the British people, who will turn to us.

Mr. Peter Hordern: The right hon. Member for Bristol, South-East (Mr. Benn) never fails to astonish the House. When he talks about the amorality of the Government, I find it astonishing that he remained a member of the Cabinet of the previous Labour Government, he being strongly opposed, apparently, to the measures imposed on that Government by the IMF. When he says that our policy should be to increase the wages of the worker, what was he doing supporting the previous Labour Government, as a member of the Cabinet, with their 5 per cent. incomes policy?
The right hon. Gentleman has given us, as in the past, a great deal of evidence of the inconsistency of his policies. He is in no position to accuse my right hon. and learned Friend the Chancellor of the Exchequer of amorality or of anything else.
The right hon. Member for Leeds, East (Mr. Healey) was harsh and critical about the Government's measures, especially those of my right hon. and learned Friend. During the Summer Recess, while in a bookshop I happened to come across a book written by the right hon. Gentleman about his photographs. It contained photographs of almost every conceivable activity. There was one shot in particular that was missing, though, namely, one of the right hon. Gentleman being hauled out of Heathrow airport when there was a run on sterling. He had to be hauled out of the airport to return to London instead of attending a Commonwealth Finance Ministers' conference in Hong Kong. Some of us remember that occasion very well. The right hon. Gentleman is in no position to criticise the Government.
It seems to me that the mood of the House and the problems of unemployment are particularly serious. I, for one, have a good deal of sympathy, although not agreement, with my right hon. and learned Friend the Member for Hexham (Mr. Rippon) in his recent letter to The Times, in which he complains about the level of interest rates. But the high level of interest rates should be regarded for what it is. It is a sympton of something that is a great deal more serious than the level itself. For the fact is that the demands upon the capital market by the public sector have been consistently too heavy for far too long. I am talking not of the technical size of the public sector borrowing requirement but of the weight on the private sector imposed by the public sector for very many years past. This weight must be reduced by some means.
Everyone must be aware, too, of the effect on industry of the level of the exchange rate. Four years ago there were $1·57 to the pound. Since then the sterling exchange rate has appreciated by more than 50 per cent. In that time wages in industry have increased by about 70 per cent. In my judgment there is no way in which an industry producing conventional manufactured goods can withstand an appreciation of about 50 per cent. in the value of the exchange rate having paid out a 70 per cent. increase in wages.
In many parts of the North-East, the North-West, Scotland and Wales, many of our traditional industries are facing great difficulties. We see the Alfred Herbert machine tool company and ICI running into losses, but they are not alone. Complete sectors of the West Midlands, and engineering firms generally, are now falling out of business. I dare say the increase in the exchange rate over the past four years is without precedent in the whole of our industrial history. Perhaps it occurred in the 1920s, when we returned to the gold standard at the wrong price. But industry cannot deal with such a burden, nor can the post-industry revolution be financed by short-term money bought on the money markets at substantial interest rates. If one is averse—as I am—to printing money, what is the alternative? Should we just wait for industry to borrow less, so that interest rates can eventually fall? Industry is borrowing not to invest but


to exist. It has no alternative. Our only solution, then, is to look at the public sector once again.
The Government have made some sharp reductions in Government capital expenditure, just as the previous Labour Government did. The proposals to cut public expenditure largely affect the Department of Industry. Fewer people will be covered by the regional aid scheme. The Department of Industry's funds cannot be greatly reduced. I should be very surprised if the demands of British Steel, British Leyland, and so on, were to decline. So 1 should also be surprised if the funds given to the Department of Industry were to be greatly reduced.
What other options exist? Perhaps savings should be made in the nationalised industries. Yet savings would mean higher prices for the nationalised industries, and those prices would have to be borne by industry. There is not much comfort to be had from that. We should look at the movement between the private sector and public sector over a period of 15 to 20 years. We should consider the movement of people between those two sectors. Fifteen years ago 1 million people moved out of the private sector and, at the same time, there was an increase of 1·3 million in the public sector. We must bear in mind that the numbers employed in the National Health Service doubled over a period of 22 years—from under 600,000 to 1·3 million. Such a phenomenon is not known by any of our industrial competitors in the Western world.
Britain employs one in five employed people in the public sector. Other countries, notably West Germany and France, employ one in seven. Perhaps the largest increase of all has occurred in local authority employment. Over the past 12 years alone, employment in local authorities has increased by 1·3 million. I accept that local authorities are the first to blame us for that state of affairs. I do not reject that criticism. The House of Commons did not know what it was doing during the past 12 to 15 years.
Neither the country nor our industry can sustain the enormous weight imposed by the very size of the public sector. The situation must be rectified. How is it to be done? I turn to the Priestley Commission, which was The first commission to

recommend comparability between the public and private sectors. It stated:
The primary principle of civil service pay should be fair comparison with the current remuneration of outside staffs employed on broadly comparable work, taking account of differences in other conditions of service.
Those other conditions of service apply today. There is growing and massive unemployment in the private sector, but very little unemployment in the public sector. There is job security in the public sector, but none in the private sector. There are index-linked pensions in the public sector, but no such assurances in the private sector. Such comparisons must be made.
I make no apology for saying that the Government can no longer sustain the basis of "broad, fair comparability" unless they return to the original conditions applied by the Priestley Commission. If one accepts that basis, and if one accepts the cash limits system—which is the only way in which the Government can properly achieve their aim of controlling the public sector—it is impossible to see how the public sector can be awarded salary increases of more than 5 per cent. or 6 per cent. Although the step is harsh, it is necessary.
What is the alternative? If that step is not accepted, further weight will be imposed on the private sector. There will be a diminution of our manufacturing base and a falling-off of industrial activity. We shall not be able to recover our industrial base, or achieve the prosperity that we all seek. There must be a better balance between the public and private sectors. Britain cannot afford to allow the economy to run down in order to preserve the size of the public sector.

Mr. Richard Wainwright: Unemployment debates are particularly important, because the unemployed—unlike most people in Britain—are not an organised or integrated pressure group. Members of Parliament form the pressure group for the unemployed. Thorough debate is therefore particularly important, although one might not have guessed that from the state of the Opposition Benches.

Mr. Harry Ewing: Perhaps the hon. Gentleman can tell us where all his


Liberal colleagues are. It is worth recording that he is the only Liberal Member in the Chamber.

Mr. Wainwright: I ask the hon. Gentleman to be patient and to wait a little while.
The unemployed can scarcely repose any confidence in the remarks the right hon. Member for Leeds, East (Mr. Healey). The right hon. Gentleman did not share with the House his personal familiarity with rising unemployment. As Chancellor, he must have learnt some valuable lessons about unemployment, but he was singularly silent about them. The unemployed will remember that the previous Chancellor of the Exchequer made brave remarks about a tax policy that he intended to introduce. They will remember that he said he would make the rich howl with pain. They will also recall that that policy was followed by four years in which he managed to extract only £215 from the growing Vestey millions that were pouring untaxed into Britain.
Hon. Members' opinions about the Government's declared economic policy are governed largely by what they hope and believe will be the result at the end of the day. In the Liberal view, the corrosive medicine that the Government are giving the country—and with which they seem determined to persist—cannot produce a lasting economic cure. It will result in a massive economic hangover. We do not believe that the Government's policies will result in any major structural change in our economic system, and we therefore look at the present, appalling results in a particularly jaundiced way.
I have made it my business, as other hon. Members have, to question members of the Government and others in high places who implement Government policy. I have asked them how they can believe that what we are going through can result in some permanent control of inflation, or any proper readjustment of our economic system. I have not received any replies worth two pence. The Governor of the Bank of England says that the Government's policy will result in massive public education as regards the effect of wage claims on inflation. The Chancellor of the Exchequer speaks of altering public psychology. Other

Ministers speak of people changing their attitudes once they have seen a reduction in the rate of inflation. There is nothing solid behind those remarks. It suggests that the Government do not know the outcome of their policies. In the meantime, as has already been pointed out, this is particularly germane in the area that I represent. It is not simply the overmanned industries or the areas in which there have been massive and possibly over-greedy pay claims, nor areas which abound in restrictive practices, which have suffered the most rapid rise in unemployment in the last 12 months.
I represent an area of West Yorkshire and Greater Manchester which traditionally has had unemployment levels far below the national average. Business men elsewhere cannot imagine that there is any spare skill or labour in Huddersfield or Oldham. But in fact we are now well above the national rate of unemployment, so hon. Members can picture a diagram of unemployment in my area is quite appalling. This cannot be attributed to bad industrial habits in recent years.
The same is true of small businesses. Not only are people discouraged from using their redundancy money to establish new small businesses, as one hoped they might, because conditions and lack of demand, of which the right hon. Member for Bristol, South-East (Mr. Benn) spoke, make it impossible to launch any new product from a small business at present, but even those businesses which were bravely established in the glowing aftermath of the Prime Minister's election victory are finding life difficult and many are going to the wall. As everyone knows. we now have a record toll of bankruptcies and compulsory liquidations.
It is becoming fashionable—and it is all too often accepted by Fleet Street—to say that much of this misery is due to a world recession which cannot be controlled any more than the weather. Indeed, the Chancellor of the Exchequer himself was guilty this afternoon of misleading the House by suggesting that we were simply sharing—no more and no less—in a common affliction among the developed countries of the world. This is not so. Our plight, especially when one considers that we alone among the developed countries have the priceless


possession of a domestic oil source, is far worse than that of our competitors. In so far as there is some world recession and probably much worse to come, this has produced in the Government a kind of paralysis when it should have produced resilience.
The proper response to a world recession is to use the opportunity and the temporarily spare labour to re-equip and be ready for the upturn in world trade so that we shall lead the industrial would at that time instead of lagging far in the rear. This has not been done.
The Government are rather fond of homely similes and images. I offer them the very homely image of the small business man, storekeeper or craftsman, who finds that his trade is slack. When no one comes to his counter or to his repair shop, he does not sit idly by and say that twiddling one's thumbs is very good for one's character. On the contrary, he takes the opportunity to refurbish his place of work, to repair his plant and generally to prepare himself for the upturn in his trade. The Government are doing nothing of the kind, and that is why there is increasing demoralisation in the country.
I still hope that tonight—I have not given up hope for the Secretary of State for Employment—we shall hear of some massive and imaginative scheme for training the young and for retraining. I hope that the Government will bring in a scheme to give young people much more pertinent and relevant training than they are getting at present, and for offering retraining to older workers. Above all, the Government should help our great modern industries to continue those very expensive apprenticeships which, not unnaturally, they are tending to shut down. If we do not hear something about massive Government expenditure on training and retraining tonight. the demoralisation will be complete.
I should like to be a great deal more precise about the main economic remedy than the Shadow Chancellor was this afternoon. He spoke of devoting some £400 million of public money to a new training venture, but he was virtually silent about the problem of a much greater injection of public money into the economy as a whole.
It is my view and that of my colleagues that, rather than sticking to this appalling totem, this out-of-date idea of

bringing the public sector borrowing requirement down to 3 per cent. of gross domestic product, which is part of the Government's financial strategy at present, the PSBR should be increased deliberately, as a response to the world recession and to our national problems, to about 5 per cent. of gross domestic product. The additional amount should be used first to help the unemployed to get cracking on some of the worse defects in our national infrastructure.
Take as an example the way in which our telecommunications are rapidly falling behind those of the rest of the developed world. Here we should take a leaf out of France's book for once and get on quickly with the application of microprocessors to telecommunications. There is the appalling slavery of commuting which is the lot of so many millions of people in this country. That could be relieved by the development of telecommunications to the home. When one considers these aspects, one gets some idea of the contribution that the unemployed could make to the quality of life if the Government had the imagination to set them on this task.
Then there is the conservation of energy, which needs no arguing for in the House but which is neglected by the Government. We are told that there are 2,5000,000 council houses completely uninsulated by modern techniques. In the private sector there were said to be 3.3 million houses with accessible lofts which were uninsulated when the right hon. Member for Bristol, South-East was responsible for these matters. I am told that fewer than million householders have taken advantage of the grants that were made available. That is an unfinished task which could absorb temporarily a great number of unemployed people. I am told that there are 4 million private houses for which insulation would be more difficult but which urgently need tackling. That field is being almost entirely neglected today.
I mention the railways, where the admirable development of some of the main inter-city lines. all leading to London, needs copying on the lines across the country—the lines which connect the North-East, for example, with Liverpool, Manchester and the North-West, where we are still treated as cattle, not be-


cause of any ill will by British Rail, but because the railways are starved of capital by the Government.
The inevitable concomitant of any injection of that size into our economy in the interests of stopping this appalling national waste of chronic and massive unemployment is the danger that such sums could go very largely directly into pay packets rather than into the objectives that I have illustrated. That underlines the compelling need for an outspoken, explicit and, if necessary, enforced pay policy by the Government towards which the Chancellor of the Exchequer is edging very timorously every time he makes a public speech.
The Chancellor must recognise now, even though he did not recognise it before, the need for such a firm and sustained pay policy. His alternative, to which in the past months he attached so much importance, has broken apart in his hands. In the past, when pay policy has been argued from this Bench, the Chancellor has replied that the publicly announced targets for the growth of money supply were his policy. When the pay bargainers, being reasonable and well-informed men and women, met around the table to settle the year's pay round, they would be aware that the Government were absolutely insistent on there not being more than 10 per cent., next year 6 per cent. and the year after 4 per cent. growth in the money supply.
That argument, if it was worth anything, collapsed with the explosion of the money supply growth. The Chancellor did not deny that in any way when he appeared before the Treasury and Civil Service Committee on Monday of this week. If the Chancellor agrees, as he does, that his main weapon has broken on him, at least for a time to come—and it will take a long time to restore credibility in any Government targets for money supply growth—surely, as a practical man, he must turn to some other weapon of policy. As he is about to move to some kind of norm for pay in the public sector, he must extend that to the rest of the economy. Otherwise, I readily agree that to reflate on the scale that I have mentioned would obviously have its dangers.
It is commonly agreed that, as part of a closely integrated industrial world, we are suffering more than others. If it were not for North Sea oil being used as a sticking plaster to cover some of the deficiencies in policy, we would be in an even more appalling situation. Surely the Government are not prepared to go on relying on a bandage provided by North Sea oil when policies are clearly available which would set this country on the right course.

Mr. Nicholas Winterton: I am pleased to follow the hon. Member for Colne Valley (Mr. Wainwright) as I find myself in agreement with some, if not all, of his remarks. However, I should make it clear that his expected level of reflation would be very damaging to our economic recovery. Likewise, I believe that his advocacy of an incomes policy would create in the long term more problems than it solved in the short term.
I think that Conservative Members are as one that the Government's priorities to reduce inflation and to cut borrowing are right, but a growing number of Government supporters feel that the policies being followed are too insensitive, that the manufacturing sector of our economy is taking the brunt of the effect of the Government's policies and that the public sector is remaining relatively unscathed. We all know that we are in a world recession, and in that situation unemployment will undoubtedly increase. But tens of thousands of people in this country are being put out of work unnecessarily because of the insensitive and inflexible monetarist policies of the Government.
I have often wondered how many Government Front Bench Members, as bosses of manufacturing concerns, have had to meet the wages bill at the end of the week. I went through the list and could count them on only one hand. That did not give me much confidence in the judgment of the Government in implementing economic policies.

Mr. Martin J. O'Neill: Will the hon. Gentleman give way?

Mr. Winterton: I shall not give way, because I promised to be brief.
It is all right to take advice from people such as Mr. Milton Friedman and others, as academics can be very helpful., but seldom, if ever, have they run businesses. I have been involved in and am deeply concerned about the plight of small businesses. As I said to my right hon. Friend the Prime Minister yesterday at Question Time, while her objectives are correct, there will be too few manufacturing concerns left in this country at the end of the day to take advantage of the success of her policies. That will mean higher unemployment and we shall suck more imports in further to undermine the manufacturing base that remains.
I commend to the House the speech made by my hon. Friend the Member for Horsham and Crawley (Mr. Hordern). What he said about the value of the pound and the level of the exchange rate was absolutely right. Those factors place our manufacturing industry in an impossible position to compete in the world.
Our textile industry has done everything asked of it by successive Governments. It has modernised and rationalised and shed hundreds of thousands of workers to meet the greater competition that has developed in the world. But what has happened? Because of the value of the pound, among other things, the Government are forcing the textile industry to face what can only be described as damaging unfair competition.

Mr. Nick Budgen: rose——

Mr. Winterton: I shall not give way.
What other country has such high interest rates as this country? This is another decision by the Government which is placing our manufacturing industry in an unfair competitive position.

Mr. Budgen: Will my hon. Friend give way?

Mr. Winterton: I shall not give way. My hon. Friend can make his own speech in his own time and in his own words if he catches Mr. Speaker's eye. My hon. Friend and I disagree fundamentally on this matter. He is a lawyer and I am a business man. Perhaps that explains it.
The Government—my Government—are responsible for placing burdens upon industry which it cannot carry if it is to remain in business and if unemployment is not to reach 3 million.
Much has been said about the textile industry. I come from an area where the textile industry is perhaps the largest employer. As I said, it has done everything that successive Governments have asked of it. Yet the plight of that industry today is absolutely disastrous. Mills are closing not by the week but by the day. Tens of thousands of good, solid citizens who have never been on strike in their lives and have never put in for inflationary wage awards are being put out of work. As a Conservative, I care for people. The Disraeli Government cared for people. I believe that that was why Disraeli was such a successful Prime Minister. I hope that our present Prime Minister will take some lessons out of the Disraeli book and practise pragmatic Tory policies and stand up for our national interest.
I have had letters from my right hon. Friend the Prime Minister indicating that she is deeply concerned about the plight of the textile industry. She indicated that a booklet published last month by the Minister of State, Department of Trade, clearly showed what had been done and the issues underlying our commitment to renegotiate a tough successor to the multi-fibre arrangement. I say to my right hon. Friend and to my right hon. Friend the Secretary of State for Trade that there will be no confounded textile industry left by the time we come to renegotiate a new multi-fibre arrangement unless the Government make their policies more flexible.
I should like to deal with two areas of dire concern. First, why should interest rates remain at their current level?

Mr. Budgen: To control the money supply.

Mr. Winterton: No. That is only part of the answer. Other European countries, including the Federal Republic of Germany, which is a member of the EEC, assist industry with subsidies when interest rates rise over a certain level. Is my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) aware of the cost to public funds of every 100,000 people put out of work in


this country? It is far in excess of what it would cost to aid industry to maintain people in work and to guarantee a good manufacturing base.
The right hon. Member for Bristol, South-East (Mr. Benn) and the hon. Member for Colne Valley dealt with energy. Why do we not use our vital North Sea raw material for the advantage of British industry? Why have the Government forced the electricity industry to put up prices by 27·3 per cent. in the last year and why have they forced the gas industry to put up prices by 32·6 per cent.? Why have rates to industry gone up by about 30 per cent.? Water rates have also gone through the roof.
The Government are hectoring and encouraging private industry to do this, that and the other, but what of the additional costs that the Government are imposing upon private business? I am not surprised that the CBI is concerned about the plight of private business.
I appreciated the speech of my right hon. and learned Friend the Chancellor of the Exchequer. However, unfortunately, tens of thousands of people in the North-West, which is the part of the country I come from, will scarcely understand a word of the monetary jingoism that he used from the Dispatch Box today. I say to my right hon. Friends on the Front Bench that there is grave concern north of London about unemployment. It may not have hit the South and South-East very much as yet, but it has hit the North. I cannot be proud that under this Government unemployment in my constituency has doubled. I am concerned for the constituency of my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter) over the closure of the Bowater mill. It is a highly efficient mill. The Government offered money to tide it over where energy costs were concerned but energy costs will continue to rise year after year.

Mr. John Grant: The hon. Gentleman is falling into the same trap as my right hon. Friend the Member for Bristol, South-East (Mr. Bern) in suggesting that London is not suffering from unemployment. Our inner city areas are suffering greatly.

Mr. Winterton: I accept that, but I do not believe that even inner London

is suffering as much as the North-East, North-West, Scotland and South Wales.
The Conservative Government came to power saying that they would help the small business man, but we have driven him out of business. We encouraged smaller business men to invest their profits. They now have no liquidity to pay the high interest rates that they owe to the banks. They are having to borrow to pay them. My right hon. Friend the Secretary of State for Employment is sympathetic to the case that I advance. Only one group is doing well—the big business man. I could name certain people who have capitalised their assets and who have pound notes pouring out of their pockets and out of the banks. They can get a far greater return from investing in banks than in manufacturing industry.
The situation is difficult for the textile and paper board industry, as it is for the new high technology industries, especially small businesses which have invested all their profits. They are in trouble. With the co-operation of the Government, I have managed to save one or two companies in my constituency. I hope that another will be helped before it goes out of business through the problems created by the Government. The Government must wake up before it is too late. People matter to the Conservative Party. We are placing out of work tens of thousands of good people who have served their country, employers who have excellent industrial relations with their work force. Once such businesses go, they will never be re-established. A few Whitehall mandarins see our future in the service and tourist industries. That will never be. We must have a flourishing manufacturing base.
I came up through small business, and I am sick to death of the bureaucratic replies that I have had to my representations over the past six to nine months. I may get no higher than the Back Benches, but at least I speak for part of the British economy that produces the wealth that enables the public sector to exist. How right Mr. Harold Macmillan was when, years ago on that excellent programme he told Mr. McKenzie that the system was a pyramid and all the workers helped to pay for the king or tribal chief. It is now an inverted pyramid. The manufacturing base is the tiny bit at the bottom, and it has to sustain the


huge administrative bureaucracy and public sector on top.
The Prime Minister carries a great deal of authority and has my deep respect. I say to her that, if we expect private industry to continue to carry the burden of the remainder of the State so that we can make provision for those in the country who need help and provide the services that we should provide, we must preserve our manufacturing base and make it grow. For heaven's sake, do not kill it, as we are doing at present.

Mr. David Lambie: In the old days the only hon. Members who participated in unemployment debates came from certain areas in Scotland, the North-East, North-West and Wales. In the South-East and London unemployment was well below the national average and certainly below that which we were experiencing. Even today, when we are returning to the situation of the hungry 1930s, unemployment in the South-East is only 6 per cent. In Scotland it is double that.
In my constituency, in the Saltcoats, Kilwinning and Irvine area, unemployment stands at 17·5 per cent. In the Garnock, which suffered the closure of the open hearth and melting shop of Glengarnock steelworks, unemployment stands at 26·2 per cent. Every fourth person is unemployed in the Garnock valley. In the district of Cunninghame, unemployment is between 18 and 19 per cent. As more redundancies are announced, those figures are increasing. There is a catalogue of closures and disasters, through Massey Harris, SKF, Monsanto, Essex International and Ryeside Mill. We believed that, no matter what the economic climate, those international and national firms would remain.
In the past fortnight there have been other disasters. Just over a year ago I opened the Newage transmission factory, which makes axles for the dumper industry and is associated with the construction industry. It has just announced that it is closing. We had great expectations for the factory, with a move from Coventry to this special development area.
Another major crisis in the past fortnight has been the decision by ICI to close the plant at Ardeer, producing

nylon socks. It is the most modern plant in Europe, with a labour force and productivity second to none. About 750 people will be made redundant immediately, with an eventual loss of over 1,100 job opportunities.
In that area unemployment already stands at 18 per cent. If the trend continues, we shall have an unemployment rate of between 30 and 35 per cent. Hon. Members representing London constituencies have seen nothing yet. I should consider that we had full employment if our unemployment rate were the same as that of the South. Even during good conditions we have never been so lucky.
The Government must take action to prevent this slow death of our manufacturing industry. The decision to close the plant at Ardeer was taken by ICI without prior consultation. I have always had a good relationship with the directors and managers of ICI. We have always had consultations and they have prided themselves on the fact that they took their workers with them in what they did. This time, we had a bolt from the blue. There have been redundancies and part closures in the past, but the firm has never closed a modern plant in which it has invested hundreds of millions of pounds. The Government must take action.
ICI has been in my constituency for more than 100 years. After the war, it asked local authorities and Ministers to prevent other companies from coming into the area, because it could use all the available labour. When American firms started to move into Scotland, they were prevented from coming to my area because of pressure from ICI. Local people and authorities co-operated with the company, because it was employing 14,500 people in the area and was prepared to invest more money in keeping the plant up to date. After we have given the firm a lifetime of service and co-operation and have prevented other firms from moving into the area to compete, the company has taken a unilateral decision, without consultation, to close its works.
When we were debating Britain's entry to the Common Market, ICI told me to vote for entry because it would be good for ICE and for my electorate. I did not take that advice, but, unfortunately, the


people of England and Scotland did. We now find that ICI is considering withdrawing from the United Kingdom, but last year it invested £600 million in Europe. The firm told me that I, as a politician, was to blame and that it was the politicians' fault that the German chemical industry could get its raw materials more cheaply than firms in Britain could buy their materials. German firms get natural gas for 50 per cent. of what we pay in Britain. I accept part of the blame, but Ministers of successive Governments must accept the major responsibility.
Why must our manufacturing industry compete with the American and European chemical industries on unfair terms? Other countries subsidise their industries, but, because of our empire tradition and our belief that we can beat everyone in international trade, our companies have to compete on unfair terms. The Government must take action. North Sea oil and gas are transported to America and after refining in the man-made fibre industry come back as nylon products and fabrics that are cheaper than we can make them. The hon. Member for Macclesfield (Mr. Winterton) and I are interested in the textile industry. At one time it was a major employer in my constituency. There are now few firms and they are all holding on by the skin of their teeth. We have short-time working and threatened closures.
Why do we not use North Sea oil and gas to protect our industries? At present, we use those resources to solve our financial problems. That is all right for bankers, financiers and dealers in the international money exchanges, but Britain will not succeed on a financial base alone. We are a manufacturing country and we must support our manufacturing industry. Instead of using the wealth from the North Sea to build up our financial base, the Government should be using it to build up a manufacturing base. That would give our manufacturing industry an opportunity to compete on equal terms with the chemical and other manufacturing industries of North America and Europe.

Mr. David Crouch: Does the hon. Gentleman agree that the artifici-

ally low price of oil for the petrochemical industry in the United States—$24 a barrel compared with $38 for North Sea oil—is causing the distortion? Does he suggest that North Sea oil should be available to British industry at an artificially low price of $24 a barrel?

Mr. Lambie: I agree with the first part of the hon. Gentleman's intervention. We have oil and gas and we can use them to build up a financial base or supply it to our manufacturing and chemical industries at a subsidised price and get the return in taxation from those industries when they begin to sell their products. The ordinary man in the street understands that, but it is difficult to get the message across to Ministers. I am not blaming only present Ministers. We had the same problem with Ministers in the Labour Government. They all seem to be tied to the view that we must have a strong financial base.
We are in a world-wide recession, but we should be able to ride it better than most other countries because we have North Sea oil and gas on which to base our success. If the Government continue with their policy of strengthening our financial base before looking at our manufacturing base, we shall be heading back to the hungry 1930s and disaster.
I have come to the debate from a meeting with Mr. Ian MacGregor, the chairman of the British Steel Corporation. I led a deputation of Scottish Members with steel interests. I was encouraged, as I always am after meetings with Mr. MacGregor, because he said that he would adopt an aggressive marketing policy in relation to North Sea oil and would try to get the BSC a share of the orders that must come from pipeline projects.
The BSC is to compete for the first time with the Japanese in making high quality steel pipes. We must encourage that. The Scottish Members with steel interests appreciate that Mr. MacGregor is drawing up a corporate plan, which lie will submit to the Government at the end of the year and which will decide the future role of the BSC. We told him that Scotland has had 12 years of rundowns, redundancies and closures. We now have a slimmed-down steel industry. In the past five years we have had massive investment at Ravenscraig


and Hunterston and the BSC must continue that investment in order to get a return.

Dr. Jeremy Bray: I was at the meeting to which my hon. Friend has referred. Mr. MacGregor's attitude on the gas-gathering pipeline is to get the orders first and look after the costs later. If the Government took that view throughout manfacturing industry, as my hon. Friend has recommended, we should not be in the difficulties that we are in today.

Mr. Lambie: My hon. Friend has reinforced my point, that it is up to the Government to decide to help BSC. Scottish hon. Members with steel interests made the case that in its corporate plan BSC must keep the Scottish steel industry as it is, that we should suffer no further redundancies and closures, that we now had some of the most modern plant in Europe and that it had to be kept working in order to keep the Scottish steel industry going and give us a base for future steel-using industries.
I ask that whenever BSC's corporate plan is presented to the Government they should take the political decision to keep the corporation going. It must be given orders and encouragement to obtain orders, so that Mr. MacGregor and BSC may be given the opportunity to make it among the most viable and active steel industries in the world. At present people are saying "We can do nothing about it." The Government are in difficulty, because there is an economic recession, not only in the capitalist world but in the Communist world, but they can do what we ask.
Some of our colleagues from the Midlands and the South-East of England are demanding more and more Government aid. Such aid certainly has a place, but it is not the solution. My constituency has all the aids that any constituency in Britain can obtain. We are a special development area, receiving the maximum grants. I have within my area Irvine new town, a so-called growth area with an unemployment rate of 17·5 per cent. In addition, because the area suffered redundancies from the closure of the open hearth and smelting shop at Glengarnock steel works, the area has aid from BSC Industries. Therefore, any firm coming to my

area can have a financial package second to none within the United Kingdom. At least, it is necessary to go to Northern Ireland to obtain a better package, but the people in Northern Ireland are in a worse position, with the same ICI closures as I have.
Simply to paper over the cracks, to plaster up the hole, is no solution. One can put all the aids into one financial package, but that will not solve the problem. We need a fundamental change in Government policy. First—even some Tories are now demanding this—we must bring the rate of interest down. A rate of 16 per cent. cannot last, or, if it does, we shall see the end of manufacturing industry. The manufacturers, those who run industry, the small business men, all vote Tory. They are the solid base of Tory support. Unfortunately, they are the people who have been hardest hit by this Government. I am surprised that they are not in revolt. They are always looking for a revolution of the unemployed. We want a revolt and a revolution by the industrialists and the manufacturers. They are the people who are suffering most and are the people who should be putting pressure on the faceless men on the Government Front Bench.
I am glad to see that the Under-Secretary of State for Scotland with responsibility for industry is present. I tried to contact him yesterday, but was told that he was sick. I told his private secretary "There are a hell of a lot of people in Scotland who are sick, not because of illness, but because their two representatives—the Secretary of State for Scotland and the Minister responsible for industry—who are supposed to be standing up for the rights of Scotland, are not doing so." With friends like those, God help the people!
The Government must get the rate of interest down, to get away from the idea of salvation through solving our financial problem, thinking that then all the other problems will be solved. Secondly, the Government must give some help to manufacturing industry by using North Sea oil and gas to subsidise its raw materials.
The Government must also consider leaving the European Economic Community. If ever the people of Britain were conned, it was when they were conned into the EEC. It has certainly


been good for the directors of ICI. Eleven hundred people in my constituency are being sacked by ICI. I wanted to know what was happening to the chairman. I discovered that Sir Maurice Hodgson receives £124,380 a year—nearly £125,000 for closing part of the most successful industry that this country has built up. The gang who have hold of it at present have taken their whack. They are taking their pound of flesh. The blood is coming out, and all my constituents are going to the wall.
Moreover, all the chairmen of ICI retire early. I take, for example, Sir Rowland Wright, last year's chairman, a gentleman whom I have often met. When he retired he became the chairman of Blue Circle Industries Ltd. From what we have read lately, he is not making a good job of that industry either, because there are redundancies there as well. He receives £24,813, in addition to his pension from ICI.
I tried to find out what pensions and other benefits these gentlemen receive after their retirement from ICI. It is difficult, and I could not obtain information for individuals, but I have a collective figure. Last year, nearly £2 million was paid in pensions and gratuities in respect of the executive service of former directors. There is only a handful of directors of ICI to share that £2 million—£2 million in pension plus all the other jobs, the running of banks and industries once those people have retired from ICI. I want them sacked before they sack my people. It is they who have caused the trouble.
Therefore, I ask that the Government do something. We need a change of policy. If we cannot have a change of policy with the present Prime Minister, let us get rid of her. If we do not, we shall get rid of Britain's industries.

Mr. Mark Wolfson: I am grateful for the opportunity to take part in this important debate. It is important to the Opposition, to the Government and to the nation, but most of all it should be important to all the unemployed. However, it will be important to those without jobs only if it seems to them to be relevant to a solution of their individual and deeply disturbing personal problems. Or is the debate

only an opportunity for sterile "yaboo" politics, or an opportunity for a warm-up over the course in the Opposition leadership stakes?
I shall not rehearse the reasons for the low level of productivity, low profit levels, lack of international competitiveness and thus a contraction of our manufacturing base, or go over again the economic arguments behind the Government's strategy. I want to deal with the future rather than the present. An upturn in economic activity will come—[Horn. MEMBERS: "When?"]—and when it does two problems will recur. If the Opposition do not wish to consider these practical problems that our industry will continue to face, they do a disservice to the very cause that they advocate. The two problems are, in spite of the present situation, a shortage of skilled manpower and a shortage of capacity. These have been suffered in every upturn in the past 25 years. They result in excessive imports and lost export orders.
I should like the House to consider the following. Britain's training system for producing the skilled manpower required for a modern and competitive manufacturing base is still the worst in the West. The Industrial Training Act 1964 and the revisions of 1973 have in no way solved the problem. We now have a sizeable training bureaucracy, and we have considerable effort devoted to training by employers, trade unions and Government officials. But there continue to be serious complaints about skill shortages and the failure of the training system to respond adequately to industry's changing needs. Much of the argument in terms of industry's problems is the fact that we have not been responsive to the changing needs of consumers both in this country and abroad.

Mr. Robert Hughes: Who are "we"?

Mr. Wolfson: The consumer, Britain, industry as a whole, and Governments of both parties.
Fundamental reforms of training have not been achieved. The reform of the apprenticeship system is one necessity. Better vocational preparation is another. The setting of standards to ensure that training programmes are appropriate in


content and length is a third. Our competitors in all parts of the world often achieve better results. I should like to deal specifically with Germany and the United States. Those two countries provide clear and frightening examples of how far Britain still has to go in overcoming these self-made problems.
It is crucial that we move away from time-served qualifications which all too often are limited only to young people. Instead, we need to establish a sensible pattern of step-by-step qualifications available to candidates of any age which will provide a qualification acceptable to employers, recognised by trade unions and relevant to making British manufacturing industry effective in the world league. In Germany, there is a system of testing to produce, for example, toolmakers at any age and to the highest standards. Apart from Ireland, Britain has the highest proportion among Western countries of school leavers receiving neither an apprenticeship nor any full-time vocational education. As many as 44 per cent. of young people go into the labour market in this country straight from school with no training at all. Fourteen per cent. win a time-served apprenticeship, 10 per cent. go into full-time vocational education and 32 per cent. into full-time higher education. Training in Britain is mainly left for individual employers to decide.
In West Germany, by contrast, training is based on collective employer needs viewed in national rather than individual company or industrial terms. As many as 50 per cent. of young school leavers in West Germany go into apprenticeship and only 6 per cent., compared with Britain's 44 per cent., go straight into a job without any training.
If this country is to become effective and competitive as a manufacturing base—I agree with the strong pleas of Opposition Members that we have to remain so—we have to tackle this fundamental problem and difficulty. With three times as many apprentices as in Britain, the West Germany economy benefits from having two out of every three men and one out of every two women in the labour market with vocational qualifications. A similar pattern applies in France.
I can quote an interesting example in the United States of a company in the state of New York where the Teamsters

Union is as positive as management in ensuring that the upgrading of unskilled workers continues to turn them into skilled workers to meet the needs of modern and changing industry. A subsidy is provided by the local authority organisation in the form of unemployment pay which provides an incentive for the company to carry out upgrading training at limited cost to itself. This costs the state overall no more than keeping the individual on unemployment pay alone.
This is an area that we need to consider with care and with a view to possible implementation. Those individuals who go on courses of upgrading in their skill are required to complete it and to reach specific standards, for which there are tests, and to do so, not on the basis of time-serving, but on the far more relevant criteria of standards reached. The fast worker can achieve his qualification more quickly, and increase his earnings as a result.
In Britain our system remains far too inflexible. In a company I know operating in Barnsley the machine shop making high precision tools for the aircraft industry still has a permanent shortage of highly skilled men. Yet, even in the climate of unemployment that exists in Britain, the chances of achieving the kind of flexibility in turning less skilled men into highly skilled men is described as hopeless by individuals in key positions in industry and in training.
There are two reasons. Employers in this country fear the expense of paying full-time rates to qualify individuals at an earlier age and the unions continuously oppose the switch to standard testing rather than time-serving. I put with genuine feeling to Opposition Members, who have influence with their trade union colleagues, the question, "Why are they not making a stronger plea for a change in this attitude?" It needs to be made to management. I hope that the Government Front Bench will campaign, but Opposition Members also have an important role to play in being realistic in achieving the changes that we need.
My second specific point concerns a shortage of capacity. It is strange perhaps to talk of such a shortage now, but it will come when the change occurs. Lack of investment is often blamed for Britain's inability to be industrially competitive. I


suggest that this is not the only problem. It is not even perhaps the fundamental problem. The real problem is using our existing. investment better. That means an acceptance throughout British manufacturing industry of double shift working—shifts from 6 am to 2 pm and 2 pm to 10 pm.
I am not advocating increased night shift working. Experience generally suggests that it is not particularly effective. There is the difficulty of lack of management involvement. Often there is poor supervision, relatively low quality of workmanship and even, indeed, the appalling examples that come to light from time to time of sleeping on the job. The double day shift system is another matter. We should consider the effect of such a system not only on the greater utilisation of capital investment but on the balance that it can produce in changing the numbers of direct producers of wealth against the indirect back-up staff. There could be 100 workers on a normal eight-hour day, backed by another 100 indirect workers. By going on to a two-shift system, the likelihood is that it will be necessary to increase the indirect backup staff by perhaps only 25 instead of 100. There are profit possibilities in such a system. It produces more directly productive jobs and doubles the use of existing investment.
Often multinationals come under intense criticism from the Opposition, although the management value of having worked in the broader spectrum and having compared work practices in various countries can be invaluable. By utilising its management knowledge gained internationally a multinational company was able to reduce its export prices by 40 per cent. as a result of moving to the double shift system.
I accept that that system is not popular in Britain, partly because of tradition and partly because of our social practice. Let us consider Rochester in the United States, which is similar in size to Bristol. There it is possible for workers who come off the late day shift at 10 pm to buy a drink and go for a meal or to a cinema. The leisure services are geared to cope with a double shift system. One could follow the other. Services will develop to provide for the leisure require-

ments of workers as we move over to the new system.
However, it is difficult and tough to change. Management is not always enthusiastic at the prospect of the hassle involved in achieving a change and, unfortunately, union representatives are not always prepared to negotiate realistic wage levels for a double shift system. The system cannot work if a company has to pay time and a half or time and a third. There should be a premium for a double shift system but it must be realistic.
What action are the Government taking to achieve rapid improvement in our training systems and a change of attitude to the double shift system? These are practical changes. They are two examples of activities which are essential for the future of Britain. Governments have a role as catalysts. They should campaign to stimulate and help to achieve such a change.

Mr. Gordon Wilson: The hon. Member for Sevenoaks (Mr. Wolfson) points to one of the difficulties. He was talking of the need for double shifts. The trouble is that many of our industries can barely manage a single shift, because they are going to the wall.
The hon. Member for Macclesfield (Mr. Winterton) delivered a forceful, direct and effective speech criticising the Government's policies. Obviously, he feels strongly and sincerely about what is happening in his area and to the textile trade in particular.
Scotland faces an economic blizzard, the like of which I have never experienced. Almost every day factories are closing and jobs are lost. At one time we used to talk about redundancies. Now factories are being closed and no one knows whether they will be reopened. Will it be possible, in the changing technological world, to reopen the factories? If not, many areas face perpetual unemployment. We cannot see the gleam of light through the darkness.
The Government must reappraise their policies. Earlier in this Session I said that the Government had been elected by the South for the South. The Financial Times of 30 June 1980 stated:
consequently many people working outside manufacturing and living in the southern half


of Britain may hardly feel the pinch of recession.
That might be true of those who live in the South of the United Kingdom but hon. Members who have wristled with a declining manufacturing base in Scotland for the last 20 years are not easily convinced that the upturn will take place in the manner suggested by Government. The gloomier the prospects, the less likely it is that an area will burst into expansion. Areas that are bright, aggressive and attractive find it easier to create additional jobs. Firms looking for locations often prefer the new towns, where there is effervescence. Success breeds success.
As we move into winter the Fraser of Allander Institute has updated the estimate that it made in July 1979 of 199,000 unemployed in Scotland. Now we are heading for 250,000 unemployed and the expectation is 300,000—the equivalent of 3 million in the United Kingdom as a whole.
The Government must examine their overall economic policies. Hon. Members have referred to the sticking-plaster approach. Some argue that oil is the solution to the problem. The hon. Member for Central Ayrshire (Mr. Lambie) referred to the failure of regional policies. He said that even areas with the maximum advantage of special development area status still found it difficult to attract new industry. The key must surely be the way in which the economy is managed.
Dr. Kay Carmichael, in a message to the Scottish Pre-School Play Group Association, recently stated:
The next time you hear about 200 men being laid off—just think of their families and children.
Already one in four Scottish people lives in poverty, and this number will grow, particularly when the changes in social security and supplementary benefits make their impact in November. Severe social strains will be placed on the community. There may be social unrest as the new generation leaving school discovers that there is no employment. In September 1,343 young people in Dundee were seeking employment. Only three vacancies were available. That is the horrific picture of the suffering in an area such as Dundee.
As the older industrial bases slip and the heavier textile, engineering and shipbuilding industries decline, it is more difficult to attract new industries. Hitherto more prosperous areas such as the Midlands and the South-East of England are beginning to experience the tensions, strains and cultural shock of unemployment. Such areas will put greater pressure on the Government for a share of the resources. The level of aid to the other industrial areas, which have suffered longer and deeper, will be cut. The spread of assistance will be thinner.
Having heard the Chancellor of the Exchequer and the former Chancellor of the Exchequer, the right hon. Member for Leeds, East (Mr. Healey) exchanging words earlier, I find it difficult to choose between the respective policies of the IMF man of the last Government and the Mogadon man of the present Government. The debate between them has lasted three or four years and has become a joust, in which the real essentials and the human economic problems have been lost. All four contenders for the Labour leadership are tarred with the IMF brush. They accepted the IMF policies imposed upon the Labour Government, since they did riot dissent sufficiently to resign. If that was the case in the previous Government, would it not he so with a future Government who failed to look for changes in overall strategy?

Mr. Austin Mitchell: Who put this Government in?

Mr. Wilson: Certainly not the people of Scotland. They were elected by the Midlands and the South of England. The Scottish people certainly did not vote for a Conservative Government.

Mr. Mitchell: You voted for this lot.

Mr. Wilson: I certainly voted against the last Government, which in its five years in power doubled unemployment in Scotland and doubled prices as well. We put the Labour Government out because they were a lousy Government—I hope that that is not an unparliamentary expression. The very fact that this Government have proved to be less satisfactory than their predecessors is no advertisement for the Wilson-Callaghan Administration. Labour Members must surely admit to the deficiencies of their Government. If that were not so, the debate


that they are having now over the Labour leadership must surely be one of the most phoney of all time. There are certainly tensions in the Labour Party, because many people in it recognise that when it was in office it singularly failed to tackle many of the United Kingdom's economic and social problems.
My standpoint, as a member of the Scottish National Party, is that the Labour Government grievously failed Scotland. They were put out of power because they refused to deliver the Scottish Assembly in accordance with the pledge upon which they had been elected in October 1974. Between 70 and 100 Labour Members refused to promise to support their Government if it came to driving the proposal through after the "Yes" vote in the referendum.
I therefore have no hesitation in condemning the previous Government for their record. We had hopes that the party that is now in opposition and seeking election would come forward with the policies that would deal with the economic blizzard.

Mr. Lambie: That is why we are changing our leader.

Mr. Wilson: That may be, but far be it from me to become involved in that debate. It certainly is affirmation of the point it I made, that there are certain honest members of the Labour Party who are willing to recognise the deficiencies of the previous Administration.
I was heartened by the statement that Mr. MacGregor, of the British Steel Corporation, intends to seek a greater share of the contracts being given in the development of Scotland's offshore oil resources. It is a scandal of the past that British Steel has failed to take up these opportunities. I should mention to the hon. Member for Central Ayrshire and to Mr. MacGregor—when he reads the glowing tributes paid to him today—that in the 11 October edition of The Oilman, and repeated in the Scottish press earlier this week, is the statement that the United Kingdom—and that means Scott Lithgow—is likely to lose the BP order for one of the new oil rigs.
That is happening at a time when the oil industry is falling over itself to acquire more oil rigs to cope with the

world-wide boom in exploration. It must suggest that unless the opportunities are taken up British Steel will, in turn, have an enhanced share of a zero order of steel, because our foreign competitors will be manufacturing the rigs and ordering steel from their own steelworks.

Mr. Lambie: Surely this is a case where Ministers should direct BP—a British company—to buy its vessels in an English or Scottish yard. Government action is needed.

Mr. Wilson: I made a statement about that this morning, and I have tabled a parliamentary question suggesting that the Government should take powers to ensure that something of that sort happens. For once, therefore, I am four square in line with the hon. Member. It would be a crying shame, and a handicap to our industry, if a big oil company that is dependent upon licences for exploration and production from the British Government were allowed to get away with this kind of racketeering. I do not think that there is any other word that I should care to apply.
In our quest for solutions we can only appeal to the Government at this stage to change their policies, to bring down interest rates and, by doing so, to bring down the value of sterling. The very fact that a country possesses oil should not necessarily cause the currency to rocket in value. Norway, whose economy is probably more affected by oil production than ours is, has enjoyed a reasonably stable value for the krone. Norway's exports and industrial production are both up. Unemployment is at about 41,000, a mere fraction of that in the United Kingdom, or even Scotland. The very fact that we produce our own oil is no excuse for the Government's not taking action to try to bring the value of the pound down to a more reasonable level.
We must use our oil resources for industrial investment. During the period of office of the last Government I endeavoured to press for that to happen, and I was therefore intrigued by the statement by the right hon. Member for Leeds, East today that he would now support an industrial development fund. It was my understanding that the Treasury, under his leadership, placed


barriers in the way of the hypothecation of the oil revenues into an industrial sector. That was probably the fatal mistake of two or three years ago. Once money goes into the Treasury, it is extremely difficult to get it out again for industrial purposes.
It is also clear in the statement of the Fraser of Allander Institute that although unemployment in Scotland is increasing, Scotland now has higher productivity per head than the rest of the United Kingdom. It attributes that productivity directly to investment in Scotland. If that is so, there is a greater need than ever for higher industrial investment in Scotland if we are to cure our fundamental economic difficulties.
Even if the Government change their policies and bring down interest rates and the value of the pound, both of which will be beneficial to manufacturing industry, there is a real and urgent case for them to bring forward an immediate reflationary Budget in order to try to restore a satisfactory level of employment. For instance, housing grants are to be slashed. That is a cut in public expenditure, but it has been explained to me by the private building industry in Dundee that that will effectively create a lack of business for that sector and cause additional unemployment.
There are so many ways in which, without causing hyper-inflation or overheating our very cold economy, a Government, if they were sensitive to the problems that they have caused, could take action to alleviate them. If they do not do that I hope that the hon. Member for Macclesfield will at least have the courage of his convictions and join the rest of us in the Lobby to vote against his Government tonight.

Rev. Ian Paisley: The last time that I addressed the House on the unemployment disaster in Northern Ireland was on 29 July. Then, 84,684 people were unemployed. At that time the Minister of State told the people of Northern Ireland:
This is a grim figure, but there is a silver lining.
I should like to examine the three months that have followed the announcement of that figure. Today the number of unem-

ployed is 89,900. The overall unemployment percentage in Northern Ireland compares with some of the worst percentages on this side of the water, but there might be one or two black spots in Great Britain that are higher than our average.
In July Strabane had an unemployment of 27·5 per cent. It is now 30·4 per cent. Yet we were told by the Minister of State:
This is a grim figure, but there is a silver lining.

Mr. Lambie: Have faith!

Rev. Ian Paisley: Faith is the substance of things hoped for and the evidence of things not seen. There is neither evidence nor substance if the Government continue their policy in Northern treiana. I do not want to develop my homiletics on that text.
The right hon. Member for Down, South (Mr. Powell) has supported the Government's disastrous policies, yet he represents Newry, which, in July, had an unemployment level of 25·6 per cent., which has now risen to 26·2 per cent. In the old days, Ballymena, the heart of my constituency, had the best employment record in Northern Ireland with about 4 per cent. unemployed. In July the figure was 15·1 per cent; it is now 15·9 per cent. The other four worst areas are Londonderry, Dungannon, Cookstown and Omagh. The figures for those areas are appalling. In August, the figure for Londonderry was 21·1 per cent. It is now 26·2 per cent. In Dungannon it was 27 per cent, and it is now 28 per cent. In Cookstown it was 26·2 per cent, and now it is 27·2 per cent. In Omagh it was 19·4 per cent, and now it is 20·1 per cent.
The upward trend of those figures is staggering. In July, 84,684 were unemployed. We were told that that figure was grim, but that a silver lining would come. In August no silver lining had come, and 88,100 were unemployed. In September the figure had risen to 89,300, and in October to 89,900. The figures are alarming, because usually the October figures show a large fall from those for September because school leavers find jobs. In September 1978 the unemployment figure was 70,955. In October it had fallen to 64,595. In September 1979 the figure was 69,557. In October it had fallen to 64,812.
Now the figures do not even remain static. They rose when they should have fallen by at least 3,000 or 4,000. It is a staggering fact that there are now 8,600 unemployed school leavers in Northern Ireland. That is the highest-ever figure in the Province. That is a grave situation. It is easy to trot out statistics, but behind them are wrapped up hopes and despairs, ambitions and disappointments, joys and sorrows and heartbreaks and homebreaks.
I sympathise with the hon Member for Central Ayrshire (Mr. Lambie). This morning I visited the ICI plant at Kilroot and met representatives of the trade unions. We discussed the drastic closure and the loss of 1,100 jobs in the Carrickfergus area. When I came to the House, Courtaulds employed 2,000 people at Carrickfergus. It now employs 250. There is now to be a closure at the ICI factory. The grim reality facing us today is that every man over the age of 50 going out through the gates at Kilroot faces the prospect that he will never work again. He will be on the dole until the end of his life. That is a terrible tragedy. We should consider the hopes and despairs of the real persons behind the figures.
It is a serious matter for any Minister to come to Northern Ireland and say that, although the figures are grim, there is a silver lining, when there is no such thing. Everybody, including the employers and the unions, knows that shortly Northern Ireland will have 100,000 unemployed. So grave is the position that both employers and unions agree that by the end of next year that figure could rise to between 110,000 and 125,000. That is the reality in Northern Ireland today.
I welcome the forthright and courageous speech of the hon. Member for Macclesfield (Mr. Winterton). He made the speech from his heart. As I listened I felt that we were hearing the genuine voices of many thousands of people who voted for the Government. They were being reflected by the hon. Gentleman today. I congratulate him on his courage and on the way in which he put forward his argument.
Northern Ireland used to have 30 per cent. of the British textile industry. Today that industry is near closure. The Labour Administration did not help that industry, and this Administration has not done so either. Both must bear the blame. We were told that Europe was the answer. I always knew that it was not the answer. I was not convinced to vote for it. It will be a great day when we leave the Common Market and become sovereign in our affairs, so that we can do what we should for the people of Britain. Why is it that, of all the members of the Common Market, our Government policies Common Market regulations with a strictness that flabbergasts me, while other Governments have Nelsons with blind eyes? They do not see when the Common Market laws are violated. In Northern Ireland we are policing EEC laws and putting our people out of work. I cannot understand that.
There is a cry throughout the Province, from every section of the community. I met representatives of the farming unions recently. They said that agriculture was bleeding to death and that 5,000 jobs would be lost in intensive farming. That is the basic industry of Northern Ireland. We shall be in an economic wilderness and an economic slum. I met a deputation from the bakeries when it visited the House this week to meet a Minister, whom I thank for his helpfulness. They said that the bakery industry was being destroyed. We have lost the Co-operative bakery at Belfast, the Model bakery in Omagh, the Co-operative bakery at Enniskillen, Hughes and Kennedy at Belfast and Hunters and Eatons of Londonderry. The position in the bakery industry is serious.
The Government must quit their inflexible attitude. They must look realistically at the problem. Would it not be far better to use the money that is paid in unemployment benefits and redundancies to give those firms the cash that they need to continue operating?
If we are ever to see a way out of the tragedy, the Government must make a firm resolve on terrorism. I do not want to see a repetition of the sort of action that they took this week, which has only encouraged terrorism. They must deal with the terrorists and get on with the


job of finding employment for the people of Northern Ireland.

Mr. Stan Thorne: I listened to the remarks of the hon. Member for Antrim, North (Rev. Ian Paisley) and recognised from the outset that, while we have a major unemployment problem in Preston, it cannot be as bad as the position that he revealed. We cannot accept what the Government Front Bench said about the position in London and the South-East, where, clearly, the position is still not as acute as it is in the North-West, the North-East and other parts of the country.
In my travel-to-work area 12,981 people are at present officially registered as unemployed, although, clearly, married women who are made redundant do not register. Therefore, the figure is probably quite a bit higher. It represents about 9 per cent. of the work force. However, the most significant figures are those from December 1979 to the present day. During that time, 7,000 jobs have been lost. In November 1979, 1,047 jobs were lost in the textile industry and in February 1980, 2,564 disappeared at Courtaulds. I shall not bore the House with the other figures for July, August and September. In October, the Lancashire road construction unit was threatened with the loss of 120 jobs. Already, Carrington Viyella is closing another textile factory in the Lostock Hall part of my constituency.
Many workers in British Aerospace are also under threat, and there are about 14,000 workers in that industry in the Preston travel-to-work area. The British Leyland bus and truck division is already receiving messages from various management centres within its industry that suggest that it, too, will face major, significant cutbacks. The research and development section of British Aerospace employs 3,000 highly skilled design engineers, but a block has been placed on further development in that sector.
Apparently, the new concept of the British aerospace industry, following the selling off to private enterprise, is that we do not need to think about the sort of aircraft that we may need in the late 1980s or early 1990s, because we shall not be producing them in this country

but shall be relying on American manufacturers to take care of our needs in that sector. The workers in the aerospace industry clearly reject that completely, even though it is already apparent, and has been for some time, that America, through agencies, is directly recruiting design teams from Warton near Preston, exporting them to America and giving them highly attractive inducements in terms of salary and other incentives.
Therefore, we are concerned not only about the jobs that we have already lost but about prospects. The Government have entered into an agreement that enables Hino, the Japanese truck manufacturers, to open an assembly plant at Warrington new town, and that will inevitably affect the share of the market that can be obtained by Leyland trucks manufactured within my treval-to-work area. Within the constituency, Seddon-Atkinson, which also manufactures trucks, and which is a subsidiary of International Harvester, has been on a three-day working week for some time.
The social effects of unemployment were dealt with in the usual short sentence by the Chancellor. Expressing concern seems to be the way of dealing with the social effects of unemployment. No concern can express the real feelings of unemployed men, who rapidly find themselves without roots. Generally speaking, man prefers to work. I would argue that he is basically a creative animal and that, therefore, he needs to work. He wants to be useful to his family, his community and his fellow men. He does not want to fill in forms in order to apply for free school meals, social security benefit, supplementary benefits and other things, and wonder whether he should get out the bike, have a ride around the town and go to the local library in order to fill in his time. He is frustrated. Work is vital to him.
In last year's Queen's Speech, the Government did not promise the British worker that attempts would be made to protect him from unemployment. They said that it was the Government's job to promote employment—a positive presentation of their intentions. It is easy to see what a useless presentation that was in terms of the policies that the Government


intended to pursue. It is the Government's job to extend work opportunities. The Central Lancashire new town has successfully attempted to build certain new small factories. It has leased contracts for new house building, but cuts in public expenditure will inevitably prevent those things reaching their full fruition. Cuts have already created contraction in essential social services.
I notice the hon. Member for Preston, North (Mr. Atkins) in the Chamber. He must experience precisely the same difficulties as I do when attempting to refer cases of dire need to the Lancashire county council social services department. Time and again I have referred back to me the decisions taken by that body on the basis of public expenditure cuts. A family service unit has just been closed in my constituency because the county council cannot afford to pay the social workers the necessary money to keep the service going. It is ironic that precisely at a time when there is a greater demand for social services, to some degree arising from unemployment, the Government are cutting back on the resources available to local authorities to provide those services.
We often hear talk from Conservative Members and, indeed, from some Labour Members, about human rights. I feel that in their minds the subject of human rights is often associated with the right to go along to Hyde Park and to stand up and criticise the Government, the police, the monarchy, or what have you. The concept of human rights is embodied in that activity as if that were the only human right that was worth considering. In my view the right to work is something that we have never fully accepted. Indeed, it could be argued—and I would so argue—that the concept of a human right in terms of the right to work is incompatible with a capitalist society.
It has been rightly said, time and again, that labour power is just a commodity, like any other commodity. In fact, during his remarks, the Chancellor referred to the "labour market". As a commodity it is subject to the law of supply and demand. If producers cut back because they are having difficulty in selling their products, they feel no sense of responsibility for their labour force—even though we are talking about human beings—because to them labour is merely

an appendage to the machines that produce the goods.
When I was a young man an employer told me that there could not be any sentiment in business. He meant that employers of labour could not take account of the fact that the people whom they employed were human beings. That employer contributed to my recruitment to the Labour movement, to my activity in it thereafter, and to my recognition of the fact that we shall never change that state of affairs until we have radically changed society.
No doubt the present period of unemployment will teach people about the causes, and possibly about some of the remedies. It was significant that the recent march to the Conservative Party conference at Brighton included many young people who were learning how to participate in politics for the first time. I had the pleasure of meeting some of those young people and discussing the problem with them. Those young people will grow in number. We should be under no illusions about that. But what must be avoided, particularly with the young, is the tendency, fostered by irresponsible media messages, to escape from reality through petty crime, anti-social behaviour, dropping out of society, and so on. I am confident that we shall avoid that, and that the young people of today will not be found wanting in terms of a responsible attitude to their fellow men. That was demonstrated again last Sunday, in the massive demonstration against nuclear armaments. Young people will fight to the end the inequalities of our society and to establish the necessary means by which useful jobs can be created. But how is that to be done?
My right hon. Friend the Member for Bristol, South-East (Mr. Benn) performed a useful service in indicating that one of the primary considerations for Labour Members—because the Conservatives' day is running out—is to ask themselves again and again what policies they should pursue to enable the radical changes that we seek to take place when we take over—as we certainly shall in 1983–84. I do not think that we dare to think about our taking over earlier. Should we proceed in the way in which the previous Government proceeded? Should we go along the road of monetarism—a road that I freely admit was introduced by


the previous Labour Chancellor—or should we institute economic policies that will lead to a complete reallocation of resources and a complete rethink? Should we produce for use or for private profit? How should we regenerate British industry?
Certain key questions are relevant now in regard to the trade union movement and its reaction to unemployment. Shall we see a change in attitude on the part of the trade unions in respect of the shorter working week, the reduction in overtime, longer holidays, opportunity to pursue different activities, and so on? Much education is needed in the trade union movement before we can get the sort of response we need to tackle the problem of unemployment.
I do not see too well with these spectacles, Mr. Speaker, but I know that you are getting perilously close to the edge of your Chair and are indicating that 10 minutes is sufficient for me at any time. I shall therefore draw my remarks to a conclusion, because I should like to be called to speak in another debate.
We need more Government interference to ensure that the profit takers do not desert human beings without giving their workers the right to run the companies themselves if the employers are incapable of doing so. We need a massive supply of goods to the Third world and an end to the grip of City investors on our financial institutions. If we can take steps in that direction in the near future, there are still prospects that we may avoid the terrible slump that is inevitable as long as the Conservatives rule in favour of their class.

Mr. David Atkinson: In any debate on unemployment we serve no useful purpose in apportioning blame for the unemployment figures for example, for the 590.000 that the previous Labour Government inherited when they came into office, the 763,000 jobs that were lost between 1974 and 1979 and the jobs that have been last since. That is no help to the unemployed, and it encourages only greater cynicism in the House.
Our debate is, surely, about the climate and framework that are conducive to encouraging more jobs. In saying that, I

hope that all hon. Members will recognise the cruel fact that old industries die and that jobs die with them if they cannot diversify, and that they are more likely to die at a time of world recession. It does no service to those who are employed in those industries to kid them that their jobs can be rendered safe by yet more subsidies. Moreover, by using the taxation derived from the profit of viable industries to support the nonviable industries, we shall never know how many jobs we are destroying in those viable industries. The Government are being unbelievably generous in supporting such industries as British Steel, British Shipbuilders, British Leyland and so on. What they are not doing is recognising sufficiently the job-creating industries of the future and encouraging them to the greatest possible extent.
In his Budget Statement my right hon. and learned Friend the Chancellor established the concept of enterprise zones to encourage profitable enterprises to move into the inner urban areas of high unemployment, with incentives and inducements and with the minimum of red tape. In his speech today he referred to the designation of two further zones. I should like to suggest to him an extension of the principle of enterprise zones. Has he considered the possibility of extending the concept of enterprise zones to particular industries—those that offer long-term employment prospects? If he has not, I hope that he will do so.
One such enterprise industry that would, I believe, benefit from this concept is tourism. It is obvious that international tourism will grow, and Britain, with its immense heritage, amenities and attractions, can benefit from that development. Already it is the third largest industry in this country, worth £5½ billion to our economy, and employing, directly or indirectly, 1½ million people. It can and should be worth a lot more, and it should employ many more people on a nation-wide basis, as it is capable of doing.
I urge my right hon. and learned Friend to recognise that Britain's tourist industry offers one of the best opportunities for reducing unemployment, to offer it incentives and inducements of the sort that are offered to those industries which choose to go into the enterprise zones, to cut the red tape which,


for example, encourages the establishment of the so-called pirates in the guest house business, and to end the bias in the distribution of Government grants to tourism which exists in favour of the assisted areas.
Another industry that offers employment prospects is recycling. We are all becoming aware of the folly of waste and of the opportunities that can exist for cutting costs through recycling, but we are still ignoring most of them. Paper, glass, cans, plastics, vehicles, cloth—so much of what we discard can be re-used, and that means new jobs for the future. It is an industry that can pay for itself without grants and subsidies from the Government, but what it needs is support from local government and an end to the obstacles and the restrictions that stand in its way.
When Napoleon referred to this country as a nation of shopkeepers, he was recognising the spirit of enterprise inherent in the character of the British, enterprise that is shown today not only in our shops and in our small businesses but in the so-called black economy. Two years ago Sir William Pile, as chairman of the Board of Inland Revenue, when giving evidence to the General Sub-Committee of the Expenditure Committee, said that it was "not implausible" that the black economy in this country might amount to 7½ per cent. of the gross national product, or £11 billion. That amounts to about 1 million jobs, though admittedly that includes moon-lighters—those who enjoy a formal first job, but with a second one hidden from the tax man.
I note from today's report of the Public Accounts Committee on the Inland Revenue that tax evasion from the black economy amounts to about £3½ billion. That figure includes those who are officially unemployed, but who seek to supplement their social security benefits. In whatever way the black economy is looked at, it suggests that a large number of people would like the opportunity to use their skills and experience to work for themselves, to be able to offer their services to others and to achieve, as a result, considerable job satisfaction.
I hope, therefore, that my right hon. Friend the Secretary of State and my

right hon. and learned Friend the Chancellor of the Exchequer will give greater consideration to embarking upon a study of the potential for more people to become self-employed. They are the wealth creators and the job creators of the future. I happen to believe that such a study would show that there are thousands of latent entrepreneurs in this country who have been put off doing their own thing because of the attitudes and policies of successive Governments. Pay policies, VAT registration, high taxation, regulation. licences, permits, and so on, all act as disincentives to those who would otherwise put their effort and enterprise into their own businesses.
It is by reducing such obstacles to jobs that we shall be able to overcome some of the worst effects of the present unemployment situation and of the technological revolution that is about to come. We can tackle the problem by encouraging those with basic skills whose jobs are in the declining industries—steel, motor manufacturing and so on—to apply them to those activities for which there will always be a need.
We shall never achieve a lasting economic recovery unless we get our industrial relations right. It makes me mad to read the kind of headlines that appeared on the front page of The Daily Telegraph yesterday:
15 men cost Ford £1 million production loss
The report says:
2,500 men were laid off and the production of million worth of new Ford Escorts was lost yesterday at Halewood. This followed a walkout by 15 men who did not want to walk 50 yards to new lockers provided for their belongings.
That is sheer industrial anarchy, and unless we and in particular the unions can eliminate this suicide, there is no way in which we can halt or reverse our decline.

Mr. Giles Radice: We have heard this afternoon a speech of quite appalling quality and insensitivity from the Chancellor of the Exchequer. It was the hon. Member for Macclesfield (Mr. Winterton) who spoke for the Tory voters of this country—voters who are now so deeply disappointed about what is happening.
It is he and those Opposition Members who have spoken, and the hon. Member for Antrim, North (Rev. Ian Paisley) who have been telling the Government about the real world, the world that the Chancellor does not seem to think exists.
I should have thought that if the Chancellor looked at any of the facts—I that he does, in his Treasury fastness—he would be extremely worried by what he was seeing—by the fact that interest rates continue at record levels, that the value of the pound is at its highest for seven years, that manufacturing output is nearly 10 per cent. below what it was last year, that investment is dropping, that housing starts are at a new low, that bankruptcies are at their highest level for years, that redundancies occur in all our constituencies almost every day, that vacancies are almost nonexistent except in certain areas and for certain types of jobs.
The most appalling fact of all is that unemployment is now over 2 million and that most forecasters seem to think that it will be up to 3 million by the end of next year. No one knows quite where it will end, or whether there is a natural levelling off, as Conservative Members seem to hope. The reduction of inflation is the prime goal of the Government's economic policy, but even inflation is still over 5 per cent. higher than it was when Labour left office.
All of us know the plight of business men in this country and the triple bind that they face. On the one hand, they have declining internal markets because of the squeeze on the economy. On the other hand, if they then have to borrow because they are in dire straits, interest rates are at record levels and they cannot export because there is no profit in it because of the value of the pound. It is this triple bind that is creating the bankruptcies, unemployment and redundancies in all our constituencies.
It is no wonder that British industry is so desperate, that Sir Terence Beckett, of the CBI, says that the overvalued pound will kill British industry, that the British Chamber of Commerce says that industry is in mortal peril, or that the CBI has produced its most depressing and pessimistic survey since the war. It

is no wonder that these things are happening.
If we look to the future, where can we see a way out if present policies continue? Demand is slackening. That means that companies shed labour. That means that the workers have less money to spend. That means that demand slackens yet again, and we are in a downward spiral. I do not see where the end will come.
I should like to tell the House about what is happening in the Northern region, which has the highest level of unemployment in Great Britain, if not in the United Kingdom.

Mr. Jack Dormand: It always has had.

Mr. Radice: It always has had, I agree. In October the total unemployment was 11·6 per cent., and the increase since last October is very severe indeed, because it was then 81 per cent. The vacancies this October amounted to 4,000, whereas they were 10,000 last October.
There have been 32,000 redundancies in the Northern region. That is already 12,000 more redundancies than during the whole of last year. Washington new town, in my constituency, the jewel of the Northern crown, was set up in 1964, partly by a Conservative Government. It was the great hope for the North. It is the new and most promising firms which are going bankrupt in Washington, not the old industries. There have been 1,600 redundancies since the beginning of the year. It was the town of the future. It is now being destroyed and laid waste.
It is alarming to think that there are nearly 20,000 on short-time working compensation schemes. That means there will probably be an extra 20,000 unemployed very soon in the Northern region. The chances and opportunities for school leavers are appalling. Over 30,000 are unemployed. In towns such as Gateshead and Sunderland only 40 per cent. of school leavers are likely to get a job. The House will be able to imagine the impact that all this has on families, individuals and communities. We who represent the Northern region will not forget that the Government closed down Consett without offering any alternative employment.
The plain truth is that the Govenment's policies are causing a disaster. It is all very well for foreign Friednanite observers to regard the United Kingdom as an interesting experiment. The trouble for all of us and for all our constituents is that we are the mice in the Prime Minister's laboratory, and it is a pretty terrible experience.
The Government's argument—we heard it today and we have been hearing it for the past 18 months—is that there is no alternative. They say that if the Labour Party was in power it would be doing exactly the same thing. I refute that. There is an alternative to artificially high interest rates, which boost the pound artificially high. The alternative is to reduce interest rates by 4 per cent. That is what the CBI is asking for. That would have an effect on the level of the pound. The reduction of interest rates and the level of the pound would bring immediate relief to industry. That is what industry is asking for, and the Government should be listening.
There is an alternative to the complete deflation of the economy that is now taking place. The Government could expand the economy by reducing taxes and increasing public expenditure. I know that the Government will say that they must reduce the public sector borrowing requirement. That requirement, as a percentage of GNP, is not higher than that of our competitors. In fact, it is lower than most. There is an obvious point that I am amazed the Chancellor has not understood, namely, that it is almost impossible to reduce the public sector borrowing requirement at a time of recession of the sort that we are now experiencing. There is not the output and, therefore, there are not the receipts. It is also necessary to pay out unemployment benefit. So it is almost impossible to reduce the PSBR without cutting savagely into the important services that a civilised society demands.
Mr. Nicholas Lyell (Hemel Hempstead): I listened with great interest to the hon. Gentleman's argument about Consett. He has now moved on to the subject of the public sector borrowing requirement. He said that the Government did nothing when they closed Consett. Have they not directed a good deal

of money for substantial new factory building in the Consett area? Is it not true that to do that, when we know that there is not unlimited money available, it is extremely important that the Government keep their other general spending under close control, so that they can shift money, as the hon. Gentleman would wish, in his direction?

Mr. Radice: The money that has gone to Consett is chicken-feed when compared with the number who are unemployed. Secondly, the Government must expand the economy. We are in a deep recession, and there is no demand. That is why firms are going bankrupt throughout the country.
There is an alternative to the mass unemployment that the Government are now creating. They can expand the economy. They can spend more on employment creation programmes. That is happening in Sweden, where, despite the recession, unemployment is still only 1.7 per cent. The Government could give more in aids to industry and devote more resources to education and vocational training. There will be a case for some selective import controls to save jobs in certain areas. Above all, there is an alternative to the divisiveness, the inhumanity and the narrowness of vision that the Government have shown, which are hallmarks of their period in office. I do not argue that all our problems are the Government's fault. Our case is that they have made the situation far worse than it need have been.
It stuck in our gullets to see the begging letter from Tory Central Office to firms in the Northern region, We want them to stop begging for Tory funds from firms in the region, most of which are in considerable difficulties, and do more to help industry in the region. They could do something to help the young people. I know that there are youth opportunities programmes, but they last for only a year. We need to extend the life of those programmes and link them with industrial and vocational training, so that there is a period of opportunity for all those in the 16–19 year age group. No one in that age group should be unemployed. All should have a job, be part of employment creation programmes

Mr. Budgen: rose——

Mr. Radice: No, I will not give way. Those in the 16–19 year age group, as I have said, should be in work, part of employment creation programmes or in vocational training.
We need to increase the amount that is spent on regional aid and hurry up the administrative processes so that there is not the delay that is being complained of by the CBI, both nationally and regionally. Lastly, we need to increase public capital investment in the development areas. If we do that, we shall provide more jobs in the construction industry in the way that the Labour Government adopted in the 1960s.
If the Government do not change their policy, the danger is that they will create conditions that will lead to an almost irreversible regional decline. That is the problem facing Scotland, the North, Northern Ireland, and now the North-West. If the Government do not change their policy, they will bring about an industrial decline that will be almost irreversible, or at best extremely hard to turn round.
My fear is that the Government will not change their policy. I am afraid that the doves, moderates or wets, or whatever they are called, will not speak up. They know what is happening. I can see Conservative Members in their places who know very well what is happening in their constituencies. They well know what is going on, but what are they doing? Will they join us in the Opposition Lobby tonight? No, they will not. What are they doing to persuade the Government to change their policy?
Responsibility rests not only on those who are in office but on Conservative Back Benchers, who know perfectly well what is happening and who are sustaining the Prime Minister in office. They will be losing their seats if they do not do something about it. So whatever difficulties we are now in. it will be a Labour Government who will have to clear up the mess. I only hope that the mess that we have to clear up will not be too great.

Mr. Michael Morris: The hon. Member for Chesterle-Street (Mr. Radice) painted a bleak picture of the situation in the North-

East, but my hon. Friends and I would have been a little more convinced if he had stood up boldly two or three years ago—

Mr. Radice: I did.

Mr. Morris: We would have been more convinced if he had chided the previous Labour Government to do something about structural unemployment in the North-East. There is not an hon. Member who does not find the present level of unemployment unacceptable. Every hon. Member knows that the current level will rise. Most of us realise that, unless the Government's policies come to fruition, we shall face the tragedy of 3 million unemployed.
I first came to this House in February 1974. At that time the unemployment figure stood at just over 500,000, or 2½ per cent. of the work force. When the Labour Party was in office, unemployment virtually trebled. The figure now stands at about 2 million, and a new experience faces hon. Members. I do not think that any hon. Member here today was in the House before the war. During the post-war period we have experienced relatively low levels of unemployment. None of us has ever had to face anything like the problem that we face today. This period, together with the approaching winter, will form a watershed.
Although hon. Members have complained bitterly about the number of bankruptcies, those of us in business know that many of the companies that went to the wall during the past year were bound to get into trouble.

Mr. Austin Mitchell: What about ICI?

Mr. Morris: ICI is not bankrupt. Those companies that went to the wall were not well run. They were overextended, and they were bound to go into liquidation. However, it is the good companies that feel the pressure now. In that sense, the ICIs of this world are relevant. Such companies are feeling the crunch. They are in trouble.
I know that my right hon. Friend the Secretary of State for Employment has had a particularly tough time. He probably has one of the toughest Government jobs. I congratulate him on some of the work that his Department has done during


the past 18 months. Not least, I congratulate him on the way in which he has extended and developed the youth opportunities programme. I congratulate him also on the way in which he has maintained and extended the special temporary employment programme, on the way in which the job release scheme is working and on the temporary short-time working compensation measures. Although I genuinely believe that such work has been well done, it is not the answer to structural unemployment. Nevertheless, my right hon. Friend and his colleagues can claim to have shown understanding over the past year or so.
Unlike Opposition Members, I have no complaint about the Government's basic strategy. It is of paramount importance to control inflation and to alter significantly the ratio of the public sector to the private sector. The Government have made great strides forward on both those fronts. The rate of inflation is falling, and we are selling off public assets. The latter is a great success, not least for the Department of the Environment. At last people have been given an opportunity to come out of council house servitude and own their homes.
I question one or two of the methods used to implement the Government's strategy, although I accept that it is the correct strategy. This country has the greatest coal reserves in the world. We have the assets of North Sea oil and of natural gas. Why do we pay more for our energy than do our European competitors? One can argue about the extent of the deficit, or about the premium that we pay. It is between 20 per cent. and 30 per cent., but, compared with the United States, it is between 40 per cent. and 50 per cent. We should have the competitive edge, and I do not understand why we do not have it.
It is laudable that the nationalised industries should be given a target for a return on capital. If that return on capital is achieved by the exploitation of a monopoly selling position, with the result that prices rocket, we must question whether our objective has been achieved in the right way. On other occasions the hon. Member for Norwich, South (Mr. Garrett) has joined me in complaining to the Department of Trade about dumping of footwear. The Labour

Government did little about it, but the Department of Trade has shown a greater understanding of the problem and a willingness to deal with it. I hope that we shall witness the benefits of that new awareness before long.
What is happening in the banking sector? Industrial borrowing is not increasing, so that is not the problem. This afternoon the Chancellor of the Exchequer said that the public sector borrowing requirement would be reduced in the months ahead, so that is not the problem either. I remain deeply suspicious of the entrepreneurial ability of the banking world. The banking world will find ways of lending money, and unless we are careful the money supply will continue to expand.
My right hon. Friend the Secretary of State for Employment has, rightly, preached about the realities of life. Our attitude is crucial. We live in a competitive environment, and everyone who works in a company should understand that. When will union leaders and those Opposition Members who are sponsored by trade unions stand up and point out the competitive world in which British industry exists? If they were to do so we should get some reality into wage claims. We need reality, and we need fair claims. Unless the TUC, the union-sponsored Members of Parliament and the leaders of the unions are prepared to recognise the problems facing British industry, unemployment will increase still further.
I know that my hon. Friend the Minister has spoken at great length about the problems of a skilled work force. He has tirelessly toured the country extolling the virtues of retraining. Nevertheless, every hon. Member knows that many unions still refuse to accept those who have been through skill centres. Every hon. Member knows that restrictive practices still exist in some of our industries. We need go no further than Fleet Street to see examples of restrictive practices. Somehow we must bring about a change of attitude among all parties in industry, so that people can learn a skill if they wish to do so, and then use it. Above all, there must be reality on pay.
Finally, I turn to the question of the public sector borrowing requirement. It


will not have escaped the notice of many hon. Members that it now looks as though about 10 per cent. of the PSBR will go to British Steel. On top of that there are British Shipbuilders and British Leyland, both of whom are coming forward with further demands. At what level do the demands of these nationalised industries have such an impact on the PSBR that they adversely affect the fortunes of the rest of British industry? I hope that that question is being asked. I do not claim to know the answer, but I believe that it is a question that should be asked.
I hope that the Government will keep worrying at all these aspects of policy. I believe that they will. I ask not for U-turns, but, where there is a change of circumstances, for an adjustment of policy.

Mr. David Winnick: It seems to me that the hon. Member for Northampton, South (Mr. Morris) was criticising the Government in his own sort of coded manner. I much prefer the honest approach of the hon. Member for Macclesfield (Mr. Winterton), because he spoke not only for his constituency, but for many sections of the British people, who are so tired, fed up and dissatisfied with the present economic policies of the Government. I wish that at tomorrow's Cabinet meeting there would be enough critics within the Cabinet who would speak in the same manner as the hon. Member for Macclesfield.
I remember reading about the debates that took place in the House before the war and there were critics on the Tory side, such as Mr. Harold Macmillan, who spoke out. He did not get promotion in the 1930s within his own party, but he spoke out because he believed sincerely that what was being done was wrong. When I listened to Mr. Harold Macmillan being interviewed on television recently, I felt that he had not changed his views one iota. All the criticism that we echo tonight about the appalling record of the Government, their attitude towards unemployment and their monetarist policies, were made by Mr. Macmillan in that interview with Mr. McKenzie. Those Cabinet Ministers who are considered to be critical, such as the Secretary of State for Employment, for

example, must have the guts and the courage to speak frankly around the Cabinet table, because that is what is needed.

Mr. James Dempsey: Is my hon. Friend aware that one statement was made most forcefully by Mr. Macmillan? He saw the immediate solution to this problem as reflation. I was very surprised to hear him say that. I appreciated it because he indicated quite wisely that unless we increased the wealth we could make no progress with the existing monetary policy. I hope that my hon. Friend will note that important suggestion that Mr. Macmillan made during that very good interview.

Mr. Winnick: I take the point that my hon. Friend has made.
Hardly a single day passes in the West Midlands and in the Black Country districts without news of further redundancies. Hardly a single week goes by without another closure being announced. There is no doubt, as we would expect, that manufacturing industry has been hardest hit by the Government's economic policies. In the West Midlands, we have seen the results. Unemployment in our region is mounting. The West Midlands is not associated with the worst kind of unemployment. Even in the pre-war days, families came from South Wales to Birmingham in order to find jobs. No one would dream of doing that today.
Therefore, we have every justification for saying that the West Midlands has been among the most adversely affected areas as a consequence of the Government's actions. We have nearly a quarter of a million out of work. Some 3,000 jobs in the region are vanishing every month. Between June 1979 and the end of September this year, there have been 133 closures in the West Midlands and 39 in the Black Country districts alone.
I am sure that a number of these firms were small businesses. They were promised every kind of support and encouragement by the Conservative Party when it was in opposition. What support or encouragement have they had in the last 18 or 20 months? Many of them have been driven out of business and their work forces have ended up on the dole, unable to get any kind of job. In


my borough of Walsall the unemployment rate is near 11 per cent. It is a rather bleak and depressing picture.
Much is often made by Conservative Members and certainly by the Prime Minister about the ordinary working people who voted Tory at the last election. We were told that many trade unionists voted Tory. That is true; there can be no doubt about it. That is why the Government are in office with such a large majority. But I doubt whether many of those people who were silly enough to vote Tory in May last year would do so again now. They were taken in by the promises of the Prime Minister. They have learnt a very bitter and harsh lesson, and so many unfortunately are learning that lesson in the dole queue or on short-time working.
It cannot be denied that the Tory Party will once again be associated with unemployment. I was born a few years before the Second World War started, and when I came into politics the Tory Party was always associated with what happened in the 1930s—the unemployment, the poverty, the squalor and the means test. There have been many Conservatives, such as Lord Butler, who wanted to change the image of the party and show that Conservative Government policies were somewhat different from what they were before the war. Whether Conservative Members believe me or not, the fact is that the Conservative Party is again becoming associated with unemployment on a large scale and all the resulting misery.
During the recess I visited a display put on by my local authority for unemployed young people. The town hall, where the display was held, was crowded and I am afraid it was a very bleak experience. There were literally hundreds of young people, all of them out of work, seeking advice. I noticed that one stall was advertising a vacancy for a shop assistant. The queue at that stall for an interview was the longest in the town hall. A single job—that of a shop assistant—was available. So many young people have left school this year and would be only too pleased to have the opportunity to be a shop assistant. That reminds one of the situation that existed before the war.
The accusation against the present Government is that so much of the unemployment experienced today is deliberate. It is claimed that it was the aim of the Government to create unemployment on this scale. It is no good the Prime Minister or the Secretary of State for Industry shedding crocodile tears. Their policies have created today's unemployment. There are now more than 2 million out of work and this figure could reach 3 million. That is a deliberate policy. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) was right when he made these points about the Government's policies. Sometimes my right hon. Friend is featured in the press as a man who is out of touch with ordinary people, isolated and remote. But anyone who listened to his speech tonight and compared it with that of the Chancellor of the Exchequer would not be in any doubt about who was talking the most sense.
Sometimes reference is made to the possibility of the Government doing a U-turn on incomes policy. That should not be misunderstood. There is an incomes policy now. That incomes policy is the same as that which existed in the 1930s—large-scale unemployment and all the fears that people had. That is the kind of incomes policy that is being waged, certainly in the private sector. I am worried that the trade union movement could become weakened as a result, just as it was before the war. Those of us who are active in the Labour movement must ensure that some of the mistakes that were made years ago are not repeated.
A sharp reduction in interest rates is essential. First and foremost, that would help manufacturing industry in the West Midlands. A reduction in interest rates, which many Conservative Members also believe to be necessary and about which they have publicised their views, would have an effect on the high exchange rate of the pound.
Many firms in and adjoining my constituency refer, when they speak to me or to the press, to the difficulties of exporting competitively. The difficulties which have arisen from the highest interest rates that we have ever known and the high exchange rate of the pound lead to the redundancies and closures to which I referred earlier.
I believe that it is necessary to have a proper system of protection for British industry. A number of firms in my constituency manufacture padlocks. In 1975—these figures were supplied to me by one firm—over 2 million padlocks were imported. In 1979, the figure was 41 million. When I wrote to the Minister concerned, I received a somewhat complacent reply which, nevertheless, I sent on to the firm. I received a letter only recently from the firm in which it makes the point that imported padlocks are now enjoying about 50 per cent. of the total market and that it finds it difficult to understand why the Minister should have said that the overall import figures did not show a significant increase. If this is not a significant increase, what is?
It is essential that proper protection is given to British industry and for that purpose selective import controls are necessary. I know some of the arguments against such a policy—retaliation and so on—but, unless we have such protection, we shall find ourselves with a manufacturing industry which is even weaker than it is today because imports are making ever greater inroads into British industry. I find it difficult to understand how anyone concerned with the survival of British manufacturing industry can put forward serious arguments against having some form of minimum protection.
Linked to that are changes in our membership of the Common Market. Our membership of the Common Market and the way that we have to subscribe to the Rome Treaty make it all the more difficult for us to have the import protection that I want.
There is a feeling that if one is unemployed nowadays it is not quite like before the war because at least there is some protection. I do not deny that the income of the unemployed is somewhat better than it was in pre-war days, but I emphasise that those who are forced on to the dole queues suffer great financial hardship. The accusation that we make against the Government is not only that they have deliberately created unemployment by their policies, but that they have taken a number of measures against the living standards of those who are forced on to the dole queues. For example, the earnings-related unemployment benefit is to be phased out. I do not suggest that

it was a substantial income for those who were without work, but it was a cushion. It was introduced originally to give some assistance to those who were no longer in work. What possible justification is there now for abolishing it?
The unemployment benefit is to be increased in November by 5 per cent less than the current rate of inflation. Again, that will cause extra difficulties for those who have been made redundant. For example, an unemployed married man now gets £1·70 for each child. From November he will get £1·25. Of course child benefit is to be increased, but overall an unemployed married man with a child will be only 30p better off as a result of the Government's measures.
Under the new regulations which come in next month anyone with over £2,000 will not be able to get a penny piece of supplementary benefit. A sensible man with many years' service who is made redundant and receives redundancy pay will try to save some of the money. It will come in handy whilst he is unemployed and looking for a job. But, under the new regulations, he will have to spend whatever he has in excess of £2,000 before he can obtain supplementary benefit. This is a way of hitting directly those who are undoubtedly the poorest in the community. When we compare these regulations with what happened regarding the Vestey family, we begin to understand the two nations which continue to exist in this country.
It is sometimes said that the hardest hit as a result of unemployment are the young. It is a tragedy to see young people go direct from school to the dole queue knowing full well that they have little or no chance of getting a job. Len Murray, after his visit to 10 Downing Street, was criticised because he spoke about social unrest. But does anyone imagine that we can have this level of unemployment—youngsters going direct from school to the dole queue—without having social unrest and a social explosion?
I am also concerned about men in their late forties and early fifties—sometimes skilled men—who are made redundant. They go home with the feeling in their minds that never again will they be able to take employment. This is Britain in the 1980s; this is Britain under the Administration of the right hon. Lady the Prime


Minister. Men in their late forties and early fifties suffer the psychological damage that they will not be able to earn their living again. What kind of Britain have we created 35 years after the end of the last war?
The Government have acted in the interests of those whom basically they represent—the rich and the privileged. The Labour Party—perhaps my message is now directed more to the Opposition Front Bench—understands all the difficulties and obstacles that will face the next Labour Government. We have no illusions; we live not in a dream world but in the real world. We understand what will be involved for the next Labour Government. But we want that Labour Government to have the same determination to act on behalf of the people we represent in politics as the Tories have acted in the interests of their own class.
The previous Labour Government did much good. They certainly did a great deal in the West Midlands by rescuing British Leyland. A few years ago, in a by-election campaign, I paid tribute to them, and it was right that I should have done so in those circumstances. I was not ashamed of what the Labour Government had done in the West Midlands. They also made mistakes, and perhaps those mistakes could have been avoided, even with hardly any majority in Parliament.
The next Labour Government need to be bold. They need to take on board seriously many of the policies agreed at the party conference and not to dismiss them out of hand. If we have a Labour Government determined to carry out radical and Socialist policies on behalf of the overwhelming majority of the British people, I believe that that Government will be successful, but, perhaps even more important, our industry and people will be saved.

Mr. Alan Haselhurst: It would be helpful to rid ourselves of two illusions when we discuss unemployment. The first is that it would be a derogation of Government policy if special measures were taken to deal with the unemployed, particularly the young unemployed. How can it help

to fulfil Government Policy if the fact that more people are unfortunately made unemployed adds to the public sector borrowing requirement? Estimates have been made of the cost of unemployment. We do not have an official or reliable estimate. It is suggested that 1 million unemployed can cost about £5 billion. If that is so, it must affect thinking on unemployment.
It also cannot help the Government if unemployment grows to such an extent that the public become disillusioned with their central strategy. People will become worried about the number of unemployed, and that consideration will become more important to them than the need to reorganise British industry or conquer inflation. I hope that when we say that action must be taken over unemployment we shall not be characterised, as in some journals, as being less than firm in our resolve to try to solve the country's problems. It is simply a recognition that unemployment is an unacceptable facet of our social life.
The second illusion is that which tends to come from Labour Members—that all will be well if the Government reverse their policies. If firms simply took on more people, it would satisfy some Labour Members. Unfortunately, we have a serious lack of productivity. Soaking up the unemployed into firms without regard to unit costs would be a recipe for disaster. British industry's troubles exist largely because it has failed to achieve productivity levels comparable with its competitors, who have been growing in number and becoming more effective. That has led to a decline in our performance, and the shedding of jobs. Unless we consider new work practices, using automation to its full extent, we shall not be able to sell our products in competition with the remainder of the world. We shall not earn the money needed for a healthy and expanding economy. I hope that we can look at unemployment without the emotion and party jibes exemplified by the hon. Member for Walsall, North (Mr. Winnick).
Two aspects of the approach to unemployment concern me. The previous Government introduced temporary measures to deal with unemployment. It is astonishing to hear Labour Members say that they will have to cope with the mess that


we leave. What did they say when it was being created? Unemployment has been the trend for some time. It is not a transitory phenomenon. The idea of temporary remedies feeds the belief that unemployment will pass away like a dark cloud.
We are facing a serious structural unemployment problem. New ideas must be devised to solve it. The extra product that we need in the future to found the wealth of this country will come from machines. Firms are closing factories that employ 800 people and opening those that employ 200 in order to achieve the same or greater production. That is an inevitable trend. If we deny it, we shall frustrate Britain's recovery.
Unfortunately, our unemployment problems are not temporary. I should like to believe that we could expand the economy by a certain percentage per annum and that that would soak up the surplus labour productivity. However, it is difficult to believe that this can be so, certainly within the measurable future. We must therefore take a completely new look at the structure of the labour market.
The other worrying aspect of our approach to unemployment is that we are merely reacting to it. Instead, we must try to find a positive policy of training young people before they enter their lifetime of employment in the world of work. We do far less training than our competitors, particularly in Europe. We prepare people insufficiently for working life. The Government should look for a new scheme, based on training and education, to take people to a more complete level of skill and knowledge of what is involved in the world of work. Not everyone needs to acquire technical skills, but a great deal of technological skill will be needed in most jobs in the world of tomorrow.
Only 55 per cent. of people in this country have bank accounts. However, in the near future people will be expected to handle pieces of plastic and highly automated equipment to carry out the ordinary functions of everyday life. A great deal more attention must be given to preparing people to enter employment. There must be a new approach to training and education.

Mr. Dormand: Training and retraining are extremely important. In the Northern

region we have always had the highest rate of unemployment. It has increased yet again in the most recent figures. However, the hon. Gentleman's Government is closing down a training centre. How can he justify that?

Mr. Haselhurst: We should expand training opportunities, but we need not necessarily base that expansion on existing training schemes under the Manpower Services Commission. Much good has been done by temporary employment schemes, which have become more sophisticated. There is a role for skill-centres. However, we need a fundamental change. We need greater educational content and more involvement by employers. There is great potential for the small employer to play a part in training young people for their working life. That has not yet been achieved, because the smaller employer tends to resent being, as he sees it, bureaucratically controlled and made to co-operate in training schemes and pay a levy.
In contrast, small employers have been readier to co-operate in giving young people work experience when they have been asked to take part in schemes set up by voluntary organisations or bigger employers. I concede that sometimes such schemes have been financed by the MSC. I heard recently that when a radio appeal was made to employers to make places available under the youth opportunities programme many responded and offered tens of thousands of places. There is potential, and it must be exploited much more.
I regret that a training centre has been closed under the present regime of training and I am generally looking for an expansion, but based on a new approach. It is only by looking at the matter from the training point of view, rather than by trying measures that react to unemployment or pretending that it is a temporary phonomenon—when the structural labour market demonstrates that it is not—that we shall get the right answer. We must take a positive approach.
If the Government bring forward more measures to expand the youth opportunities programme, I shall welcome them, but I suspect that they will only temper the effects of unemployment. I do not believe that they will do suffi-


cient to increase the stock of skills and knowledge that we need in our work force. I do not believe that they will do enough to increase enterprise from which the wealth-making capacity will ultimately be derived.
I look for a more positive approach and urge the Government to believe that, if they do not soon take such an approach, they may run the risk of having greater dissent in the country from the objectives that they are pursuing and which I agree that they should pursue.

ROYAL ASSENT

Mr. Deputy Speaker (Mr. Richard Crawshaw): I have to inform the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Law Reform (Miscellaneous Provisions) (Scotland) Act 1980.
2. Married Women's Policies of Assurance (Scotland) (Amendment) Act 1980.
3. Imprisonment (Temporary Provisions) Act 1980.
4. Inverclyde District Council Order Confirmation Act 1980.
5. City of Dundee District Council Order Confirmation Act 1980.
6. United Reformed Church Lion Walk Colchester Act 1980.

UNEMPLOYMENT

Question again proposed, That this House do now adjourn.

Mr. Austin Mitchell: I do not intend to begin with a catalogue of the redundancies, closures and increases in unemployment that have hit Grimsby and firms such as Rosses, Laporte and Courtaulds, and the decline of the fishing industry over the past few months. More than 2,000 jobs must be involved, but in a debate such as this the catalogue of job losses and redundancies becomes numbing and I am also filled with anger to see this happening so unnecessarily in my constituency and all over the country.
My anger is exacerbated when I see the Prime Minister reacting with the

glycerine tears that Saatchi and Saatchi have thought appropriate to put into her eyes of late, so I had better move straight on to what should be a main object of our discussion, namely, the problems raised by the hon. Member for Saffron Walden (Mr. Haselhurst).
The hon. Gentleman's speech was in contrast to so many others from the Government side, who have been either bitterly critical, as was the hon. Member for Macclesfield (Mr. Winterton), who spoke for England in a way that he has never done before, though he should have, or have spoken in a sort of Tory code which is praising with faint damns, without making it explicit exactly what they want.
The hon. Member for Saffron Walden tackled a serious problem seriously, and I agree wholeheartedly with what he said about training and the emphasis that should be placed on it before young people go into the job market. However, I question the hon. Gentleman's assumption about the importance of technological, structural or even frictional unemployment. Technological unemployment is obviously more important than it was in the 1950s or 1960s, but it is still only a comparatively small part of the problem and certainly does not explain the massive surge in unemployment that has taken place in the past few months. It is not the basic problem.
The basic problem is simple and explicable in Keynesian terms. It is a deficiency in demand. It is the same problem that faced Keynes in the 1920s. We have rising unemployment, caused by savage blows to demand that have been administered by the Government.
Three sets of policies are to blame. The cuts in spending have obviously had an effect on demand. The set-back to consumer demand and the cutting off of aid to industry have forced industry to borrow to redress the deficiencies in consumer demand that have been generated by the Government. That is the reason for the distress borrowing that is taking place.
The second cause is monetarism. We have called it punk monetarism, and it is an entirely inappropriate policy. First, how does one measure money supply? The definitions of money supply vary. Should we not accept that money is not


exogenous but endogenous and that the Government are effectively depressing and deflating the economy by old-fashioned deflationary and depressant approaches in order to fit it to a lower money supply, rather than controlling money supply in order to manage the economy—if that could be done? It could be done only by a Government who were prepared actually to control the money supply. At present the Government are not controlling the money supply but are rationing it, and the rationing of money leads to high interest rates, which exacerbate the depression and lead to all the problems that we have heard about in the debate. Monetarism is a basic cause of what has gone on.
Arising from monetarism, the third and most important cause, which will become increasingly important in the next few months, is the high value of the pound. This has been produced partly by the fact that we are on oil power, but also by the increase in interest rates. A ratchet effect operates here—interest rates are increased, money flows in, the money supply increases and interest rates have to be increased to control the money supply. That ratchet has led to the record level of interest rates and the high value of the pound. That will be the cause of serious difficulties, which are already emerging in our export industries.
The high value of the pound is directly a tax on exports and a subsidy to imports. It is no wonder that, despite our depressed home markets, imports are still flooding in. It will guarantee that there is no way out of the dilemma that the Government have created.
It is interesting to watch the Chancellor of the Exchequer scanning the horizon for signs of hope. In his present state of mind, if the four horsemen of the apocalypse rode past the Treasury windows he would greet them as signs of the new realism. He is looking everywhere for signs of hope, but there is no way out because we are in the same situation as we were in during the 1920s, when we had an overvalued pound, caused by Mr. Churchill's return to the gold standard. Keynes wrote a book entitled "Economic Consequences of Mr. Churchill", and the same volume could be written today about the economic consequences of the Prime Minister's actions.
The high value of the pound must make nonsense of the Government's whole strategy. How realistic is it to place the emphasis that the Government are placing on keeping wages down when the value of the pound is nullifying every effort that can be made in that direction? For example, the labour cost in a ton of steel is about 29 per cent. It would need a 50 per cent. increase in productivity to bring down the price of steel by 10 per cent. Yet according to the Treasury's evidence to the Select Committee on the Treasury and Civil Service—and the Treasury is always good at producing figures to prove why it was wrong—our competitive position has deteriorated by 30 per cent. in the past year.
Indeed, if the workers in the paper and board industries, where wage costs must be about 25 per cent. of the price of the final commodity, worked for free, we would still be uncompetitive against the imports from the United States and other countries.
It is impossible to redress this failure of competitiveness produced by the overvaluation of the pound by squeezing labour costs. Indeed, in the past six months the pound has increased in value more than wages have increased here. Since December it has increased by about 12 per cent. Earnings in vehicle manufacturing, for instance, have increased in those six months by 5 per cent. In the economy as a whole they have increased by 11·8 per cent.—less than the increase in the value of the pound.
That is not the whole story. The real exchange rate is up by 17 per cent., because our inflation has been uncorrected by a decline in the value of the pound and because the value of other currencies has been going down relative to the pound. That means that our relative export prices now are 45 per cent. up, because of the lack of movement in the currency over the fourth quarter of 1976, and are 52 per cent. up against the United States. That is in itself a complete explanation of our inadequate competitive position in man-made fibres or plastics compared with those from the United States. It is producing, and will worsen, the disaster for industry.
Each industry as it declines blames different causes. Fishing blames Common


Market fishing practices and the lack of aid from the Government; the textile industry blames the multi-fibre arrangement; other industries blame the unions; the man-made fibres industry blames low oil prices in the United States. But in each case the precipice over which the industry is falling is caused by the overvaluation of the currency, and the trench in which they are ending up has been dug by the Government.
In this situation, for the workers to take wage cuts would do no good at all. Financial interests are benefiting from the increased value of the pound. Finance has been the dominant interest in the economy for far too long and has been far too pampered. Wage cuts for the workers would allow financial interests, not the workers, to obtain more benefit from the value of the pound. Indeed, it could be argued that for the workers to take any cut in wages would make the whole position worse, because that would simply encourage a further upward valuation of the pound, which is the basic cause of our problem.
It is only by the workers resisting wage cuts, by demanding their share of the benefits accruing from the increase in the value of the pound, that they can have any influence on the position and have any hope of bringing the pound down. To go along with the Government's strategy now means more unemployment and higher sterling values, and therefore a greater burden on industry.
The high pound means that there is no way out along the Government's chosen path or along the path that the Cabinet "wets", a section of the Conservative Party now transmuted from "Whigs" to "wets", might advocate. It is all like a third-rate re-enactment of "The Caine Mutiny". The difference is that the mutineers lack courage, just as the captain lacks the clicking balls of Captain Queeg. Yet Mrs. Queeg has steered the ship—a rickety ship—straight into the storm. She has thrown the lifeboats overboard and has now seriously damaged the engine.
If the Cabinet "wets" have their way, their solutions are not likely to work either. They suggest bringing interest rates down minimally by, say, 4 per cent. If rates in other countries are still lower, and if, as the Chancellor of the Exchequer

pointed out today, there are other factors buoying up the pound as well, the effect on our competitive position will be minimal.
Abolition of the national insurance surcharge has been suggested. There is a strong case for that, but it would not be enough to restore profitability in British industry, given that firms are now running on negative cash flows simply to keep their share of markets, to keep going. That is an experiment that can go on only for so long.
Even an expansion of the Heath type, with the valuation of the pound as it is today, would simply have the effect of sucking in more and more imports. It is the imports of manufactured goods that are causing the problem. Therefore, that way out is also closed.
As for the Government's own proposals, they are locked into a cycle of decline. The Government's only solution seems to be more spending cuts, which exacerbate the difficulties, reduce consumer demand even further, and make the economy even more difficult to manage, locking us into the decline.
There is no way now of stopping unemployment going above 2½ million. The basic answer is to strike at the nub of our difficulties, which is to get the pound down. I see no other solution. It means, first, taking the risk—a massive risk—of expanding the economy and letting that have its normal effect of bringing down the value of the pound. It must be comombined—because we now have North Sea oil to allow us to ride out an expansion of the economy—with a massive reduction in interest rates.
If the Government say that the market controls interest rates, the answer is that the Government must control them. If necessary, they must use the printing press to bring interest rates down. It is the only way to bring interest rates down to the necessary level. [HON. MEMBERS: "What about inflation?"] I shall deal with the inflation argument a little later.
We must charge incoming funds, because it is a useless future for our economy to be the funk hole for the funny money that is rattling around the world—a situation that the Government have created. We must charge incoming funds and impose a withholding tax on


revenue from Government securities held by non-residents.
If that does not have the effect of bringing down the pound, the next step must be to print more pounds and sell them overseas to get it down to the desired level. We must have a massive devaluation, bigger than that in the 1920s, because the over-valuation is bigger than the one that ruined the economy then.
I heard mutters that what I had suggested would create inflationary pressures. But is inflation any longer the main enemy? Is not the main enemy the massive and rising unemployment and the danger of destruction of our industry? In any case, the present strategy is inflationary. Every step towards the depression that we are now in has meant an increase in unit costs, an increase that squeezes inflation into the economy.
Therefore, my answer is, first, that as resources must now be 25 per cent. under-employed, an expansion of the economy would bring down unit costs on a massive scale. We are now producing less than we were in 1973, despite massive investment since then. As we have the resources to expand the economy, we can bring down unit costs. Expansion is the only way to do it.
Secondly, if we stay in the Common Market the green pound protects us from the inflationary effects of food price increases. If we come out, we have cheaper food elsewhere. Thirdly, interest rates are a strong inflationary pressure. Under my expansionist strategy, they would come down substantially. Fourthly, the strategy would have to be combined with an incomes policy.
Expansion of the economy and bringing down the pound are now our only hope. The Tory Party has sneered at British industry, at British Leyland, British Steel, the workers, the unions and productivity. After attacking and criticising them for so long, it must now realise that the burden of saving British industry rests on their shoulders. If they do not save it, they are lost, as we all are.

Mr. William Waldegrave: It is a pleasure to speak after the hon. Member for Grimsby (Mr. Mitchell), because he let the cat out of the bag. He was honest. He said that

the defeat of inflation was not a particularly high priority for him.
I worked for a Government who tried exactly the policy that the hon. Gentleman proposed. They expanded demand as dramatically as the hon. Gentleman suggests. They did everything sought by the people who argue as the hon. Gentleman does now—the CBI of the day, the TUC of the day. The policy was followed through, and it produced nothing but high inflation. It did nothing to the real economy except damage it.
The hon. Gentleman has an honest, coherent policy. It is a policy of disaster, but it is honest and coherent. The right hon. Member for Bristol, South-East (Mr. Benn) and the hon. Members for Preston, South (Mr. Thorne) and Walsall, North (Mr. Winnick) also have a coherent policy—a policy of protection, with reflation at home. I believe that, in the end, to be equally a policy of disastrous inflation.
The right hon. Member for Leeds, East (Mr. Healey) finds himself in a greater difficulty. He has too many previous convictions as a conservative with a small "c" Finance Minister to be convincing criticising our policy. He lets his cat out of the bag when he criticises us for being "punk" monetarists. The clear implication is that there is some more grown-up, some previous rock music generation of monetarists of which he is a member. He is a rocker monetarist.

Mr, John Patten: A Beatle monetarist.

Mr. Waldegrave: Or perhaps a Beatle monetarist as my hon. Friend suggests. He merely claims to be a better monetarist, a more grown-up monetarist. That is the basis of his criticism.
I hope that those like the hon. Member for Grimsby who may, for all I know, be canvassing for the right hon. Member for Leeds, East will bear this in mind, because the right hon. Gentleman's policy is not quite theirs. I should have said to the right hon. Member for Ebbw Vale (Mr. Foot), if he had still been present, that, on the basis of the speeches by the right hon. Members for Bristol, South-East and for Leeds, East, his major competitor was on the Government side of the House. My hon. Friend the Member for Macclesfield (Mr. Winterton) would have swept the Labour Party on the basis of his speech.
We have surely learnt that the policy of trying to expand this country out of recession by the creation of inflation does not work. We have not tried it once, twice or even three times. Since the war, we have tried it about five times, and each time the resulting inflation has been higher. Each time the disruption caused in the end produces more damage to the real economy and higher unemployment.
Surely we have learnt from that experience. The structure of our economy—the structure may be different in other countries—with our propensity to import, our propensity to put resources into housing, land and speculative investment rather than real investment and our propensity to suck up any available funds into Government pay and expansion of the public sector makes that an imposible course for us.
Does this, therefore, mean that there is nothing that the Government should now be doing to try to ease the burden on British industry? We may have to wear a hair shirt. Do we have to line it with barbed wire? I think the answer is that we do not. There are some things that the British Government can do to help industry, on the costs side—costs which ultimately derive from Government.
First, there is the effect on industrial costs of what is effectively a power to tax by the great monopoly utilities. It is a power to tax that is not accountable to the House or anyone else. The growing number of complaints from industry about the increases in costs that derive from those monopoly industries must be heeded. I hope that we shall not go down the road of subsidising energy prices—the American road—but I hope that we shall give much greater attention to inventing institutions that may be necessary to bring pressure to bear on price increases brought forward by the monopoly institutions to ensure that they are not simply adding an extra effective taxation cost to industry.
Secondly, there is widespread concern about interest rates, to which many hon. Members have referred. It has been correctly pointed out that when the country goes into recession the British people save more. The savings ratio increases dramatically. This does not

happen in all countries. Are we sure that the tax privileges that over the years have been built into various forms of saving in this country—housing and pension funds are the two great examples—are not being paid for by the highest interest rates which have to be paid by the Government to suck out of that pool of saving the funds that they need to finance their programme? These are difficult nettles to grasp. I believe that before long the jungle of tax privileges for various forms of saving will need to be examined. This would help to lower interest costs to industry.
On my third point I hope for the support of my hon. Friend the Member for Oxford (Mr. Patten), who writes learned articles on this subject. Company taxation is now a jungle. We tax our companies in a way that does not make the most powerful and richest companies pay the most. In the same way as we have introduced a jungle of tax incentives for different kind of saving, we have introduced a jungle of allowances into corporation tax which means that there is an incentive to manage one's business badly and to hold more stocks than one needs. This means that the take from corporation tax is declining and that the effective taxation on companies comes from poll taxes, employment taxes, the national insurance surcharge and so forth which hits equally all companies including the weakest. We tax employment, and not real profitability. This is a complex and difficult subject. I hope, however, that in the next Finance Bill the Government will bring forward ideas to help.
There are things that the Government can do to help on the costs side of industry. It is right at a time of high inflation to have a conservative Treasury, but there are other Departments in the Government besides the Treasury. We sometimes look as though we think that we need no other Department but that conservative Treasury.
My final point takes up a matter mentioned by my hon. Friend the Member for Saffron Walden (Mr. Haselhurst). My hon. Friend doubted that the unemployment that we are experiencing as a result of the attempt to stop inflation was temporary. I believe that it is inherent in the Government's attempt to bring inflation under control, and indeed in any


attempt to bring inflation under control, that there will be a temporary and transitional increase in unemployment. There is evidence to support this from the past.
In 1919 in this country, for example, we briefly had a period of hyper-inflation. The most dramatic occasion was in Germany in 1923. Since it is the Government's case that inherent in this policy there is transitional unemployment, it is as much as to say that it is not the fault of those who are unemployed that they are unemployed. It is to say that the adjustments that are necessary to change an economy that has been based on inflation to an economy that is not so based will involve many hard adjustments, for example, in industries which have relied on a declining pound to hide increases in their costs at home. Many financial institutions, for example. have perhaps lived oft and on inflation. Employment will shift from those companies and those institutions.
If the Government are right, unemployment is transitional. If it is transitional, it it not the fault of those people who have, as it were, shouldered the burdens and the sins that their fathers for a generation, in Governments of both parties, who have built inflation into the system have laid upon them. If that is so, it behoves this Goverment, or any Government undertaking the task of stopping inflation, to protect those people. That is a duty that falls on the Government perhaps as their principal duty. In my book, it is their first duty, precedent even to the duty to increase defence expenditure in line with commitments to NATO.
The Government should not be too scared of this obligation, even though it may be expensive in the short term, because it is temporary and transitional. If it is not temporary and transitional, and if the whole basis of Government policy is wrong, or if the Government abandon their course half way through, and turn to the unemployed and say "We were wrong; we will adopt another policy", it will behove them to have looked after those people who will have suffered from what they will then be saying was a mistaken policy. It behoves the Government to direct major resources to the protection of those people. If we do not do that, wounds may be left in the unity of the country which it may take many generations to heal.

Mr. John Golding: Half a million is the number who are expected to be long-term unemployed by 1981–82. Half a million is the number of teenagers without regular work at present seeking permanent employment. In these two groups we have the hardest-hit casualties of the present depression. The problem of long-term unemployment is very grave. For the individual to be unemployed for two or three weeks is not a social disaster. To be unemployed for 12 months or more is a great personal family tragedy.
As a member of the Select Committee on employment going round the country talking to the long-term unemployed, I can only feel depressed after listening to the personal histories of those who have been unemployed for so long. Many people are distressed at being rejected for one job after another. They have to face the humiliation of being turned down. Many employers reject the long-term unemployed. Why? Their argument is that, if a man has been unemployed for a long time, he is no good. It is a vicious circle. People have no job because they have no job.
Prejudice by employers is not the only problem for the long-term unemployed. They have to face prejudice on the council estates and in the terraced streets. The prejudice is that if someone is unemployed he is a scrounger and a layabout. I have spoken to one person after another whose major fear is of being branded as a layabout and a scrounger when he is desperately seeking work.
The Employment Committee's first report on the Manpower Services Commission's corporate plan stated that the MSC's priorities were:
'safeguarding the provision of skilled manpower for industry's needs; providing training and work experience for young people, and specifically maintaining the Youth Opportunities Programme; completing the modernisation of the employment service".
The report stated firmly, categorically and unanimously:
We consider, however, that providing training and work experience for the long-term unemployed should also be a principal objective. Indeed, we believe it to be more important than modernising the employment service.
I regret that the Government's response to our report is not positive. If one interprets the Civil Service gobbledegook in


which the response is written, the Government say that there is no greater priority for the long-term unemployed and that modernisation of the employment service comes first.
Luckily, the response from the Manpower Services Commission is more favourable. The commission states:
The MSC shares the Committee's concern on behalf of the long-term unemployed, and has consistently drawn attention to their plight. Indeed, at the hearing of the Committee on 2 July, the Director of Special Programmes emphasised the MSC view when he stated that the current size of the Special Temporary Employment Programme (12,000–14,000 filled places) was insignificant in relation to both the current problem (around a third of a million adults unemployed for 12 months or more) and projected levels. The MSC is hopeful that any new measures introduced by the Government to help the unemployed will allow some room for expansion over present STEP provision.
Some room is not enough. It is rumoured that the Government intend to increase the special temporary employment programme from 12,000 to 30,000 filled places. That will not be enough. Half a million people are on the long-term unemployment list. Thirty thousand places is not enough. The juxtaposition of the two figures tells its own story. We must do more for the long-term unemployed.
No Government can bring us back to full employment overnight. The Labour Government could reduce unemployment but not bring us back to full employment. The people who have been unemployed the longest are likely to have to wait the longest for a job. That is the bitterness of their position. It is the result of the logic used by employers. There must be a massive expansion of the special temporary employment programme.
The Government should make the special temporary employment programme and the youth opportunities programme permanent. It is important to underwrite their permanency. Last year £7 million was underspent on coping with the longterm unemployed. That was because the staff and employers were uncertain about the scheme.
The scheme should be made nationwide. It was criminal of the Government to withdraw STEP from most of the country. It was a blunder to concentrate on the areas of high unemployment. In

my area, unemployment has doubled in the last year and yet there are no opportunities for the long-term unemployed or for the 19-year-olds to 21-year-olds.
In order to make the STEP scheme a success, we must increase grants to sponsors. Local authorities and voluntary bodies do not have the wherewithal to sponsor the schemes. We cannot rely on the local authorities and voluntary bodies alone. We must ensure that private employers are involved in sponsoring schemes under the STEP scheme. That means removing the rule under which they cannot sponsor if there is an element of private profit involved.
The Labour Government made it possible to renovate sports facilities for the Rugby League, and that was beneficial. We must persuade the trade unions to support the STEP scheme and the youth opportunities programme. We must say loud and clear that opposing the schemes to help the long-term unemployed is not the way to oppose the Government. If the trade unions do not co-operate in supporting the special measures, they will damage their friends and colleagues. They will hurt the unemployed, but not the Government.
The Select Committee was impressed with the youth opportunities programme, but saw a need for expansion. I have read of the Government's intention to introduce a new scheme for 16-year-olds and 17-year-olds who have been unemployed for three months or more. I hope that the Secretary of State will be able to announce that soon. It will be a step in the right direction—that is, towards the comprehensive scheme for the 16 and 17-year-olds. But to be successful the Government will have to meet certain other conditions. The Secretary of State must resist the staffing cuts that the Treasury is seeking to impose. It is impossible for the special programmes division staff and the careers service, in the face of massive increases in unemployment, to cope with a diminution of opportunities in industry and, at the same time, with cuts in staffing. There should be an exemption from staff cuts for those who are dealing with unemployment in the front line.
Additional staffing is needed to improve the quality of the youth opportunities programme. Increased staffing is needed to cut the delays between the time when


employers notify the existence of opportunities and the time when the special programmes division and the careers service can respond.
The Secretary of State could help the careers service more. He could write to the local authorities to tell them that there should be no cuts in staffing. He could give the careers service the reassurance that there is no intention of depriving it of its traditional roles.
There is another problem to be tackled in respect of the youth opportunities programme. It is estimated at present that one-third of the places are being taken up by employers who would otherwise have recruited youngsters. Employers are beginning increasingly to recruit people off a scheme rather than take on youngsters on a regular basis. That must be tackled very quickly.
It is apparent to me that the Government will be unable massively to expand the youth opportunities programme unless they are able to persuade the public corporations and the big firms to give more support. The programme has been heavily dependent upon small and medium-sized firms—the firms that are smashed out of existence by the depression, or firms in which the managements are too preoccupied to be able to support the programme.
One other disturbing aspect of the youth opportunities programme is that the number of youngsters leaving the schemes and getting regular jobs is falling fast. The Government must consider reintroducing financial incentives to employers to get youngsters into regular work. That must be done either through a direct subsidy, or through exemption from the payment of national insurance. The way in which the Government have watched the number of apprentice places fall without taking adequate action is shameful. The Government must follow the Institute of Careers Officers and determine that they will sponsor all available apprentice places.
I have spoken tonight for the unemployed. It is possible for the Government to do substantially more to stop the rot in morale that is occurring among the long-term unemployed and youth.

Mr. Donald Thompson: I shall not attempt to pursue the issues

raised by the hon. Member for Newcastle-under-Lyme (Mr. Golding), since he is clearly an expert in these matters. He knows, however, that all our lives at least 300,000 people have been unemployed, and I do not believe that that figure can ever again be fewer than 500,000, in spite of the rate at which new jobs are being created every year. Many of those new jobs—at least 1 million in the past 10 years—have been taken up by women.
In my constituency there is a milt called Mons. It is a topical name at this time of the year. I noticed that the right hon. Member for Leeds, East (Mr. Healey) was wearing his remembrance poppy. Next week as I walk across to my office in Dean's Yard I shall see the poppies being laid out for regiments long gone.
The Mons mill was named after the lads from Sowerby who were killed in the First World War. I am reminded of the fervour with which those men from Sowerby went to fight, a fervour, I imagine, very much like the enthusiasm among small business men last year when we were elected to Government. At last, they thought, they had a leader who would fight the twin evils of inflation and Socialism. They knew that the battleground would be the manufacturing areas of Britain. They knew that they would be the infantry. They thought that many would be hurt, that firms would be wounded and that many jobs would be lost for ever. It was almost a religious fervour—" Now, God be thanked Who has matched us with His hour" sort of thing. Eighteen months later the battlefield is strewn with the unemployed and the corpses of firms large and small. Almost every firm in my constituency has been wounded in the fight against inflation.
The firms that are dead are gone for ever. Firms that traded for generations are lost for ever. The jobs that they provided have been mown down by cheap imports. There has been no time to mourn their loss. Every day the local newspapers are filled with redundancies, in the same way as long casualty lists once appeared. But, although the Opposition will not believe it, there is still a determination to fight on. The troops in the front line are angry that we did not keep the promise to lift from their backs the paraphernalia of employment legisla-


tion, health and safety at work legislation, VAT returns, tax supplements, innumerable inspectors, and the junk that is strapped firmly on to the backs of small businesses—all of which must be in parade ground order and ready for inspection even in these dire times. The poor b … infantry are angry because they see profiteers, black marketeers and spurious conscientious objectors avoiding unemployment.
The profiteers are the public bodies that are unwilling to sacrifice one job. There is no discomfort for them, no jobs are lost, there is no flexibility and there is no attempt to realise the effects of inflation. They simply pass on inflated prices with a percentage profit, while ensuring that they are first in if a firm goes bust. The Post Office, electricity and gas boards and other public bodies sneer at the Government, while blaming them for their inability to contribute to the efforts of the manufacturing sector of industry to reduce inflation.
Like all black marketeers, the nationalised industries have a front of respectability, but live on the fat of the land. Manufacturing industry in my constituency is incensed that nationalised industries prefer to go abroad to buy their machinery than to buy it in Yorkshire. They appear to prefer a week in Italy to two days in Yorkshire doing what they should be doing. Employees in nationalised industries have been spared redundancy because they have been cushioned with huge pensions of lordly sums. They are shielded with aid that should have gone to where the real action is taking place and where the profits are being made.
The nationalised industries are too busy looking after themselves to care about the effect of their policies on employment in the private sector. They are too selfish to close the inefficient pits in Scotland and Wales that would make energy costs viable. They are too selfish to close the naval dockyards that should be closed. The railways are too selfish to adopt manning levels that would make them competitive and comparable with private industry. The bosses dare not do that, because the men would mutiny. The national interest is not high on the list of priorities of nationalised industries. They are interested only in coming out

on top. That is not difficult, because private industry, despite its difficulties, is still carrying nationalised industry on its back, year after year.
What about the spurious conscientious objectors—those who think that inflation is not their concern? They do not want to be touched. The local authorities and the Health Service say "Hands off". Those who push the old, the infirm and the sick into the front line, as NUPE and NALGO did last winter, must have an inflated idea of their own importance. They must think that they are very special. They are not willing to implement any policies that will affect unemployment at all. They are interested only in their own little world. Therefore, the whole burden of unemployment seems to fall on that part of the country that should be manufacturing our way out of our difficulties.
Manufacturing industry knows that inflation must be beaten before employment can rise, but at present it seems to most men and women in Sowerby—employers and employees—that they constitute the only army fighting—the forgotten private army of private industry. By next year that army will have disappeared unless the Government can persuade the nationalised industries, the public bodies and local government to play their part.

Mr. Ernie Ross: There are two root causes of our current level of unemployment. One is undoubtedly the massive slump in the capitalist world, with more than 154 million people out of work and all the associated waste of talent, effort and revenue involved in that number. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) clearly laid out the strategy that the Government could follow if they were interested in saving Britain.
I leave that matter aside and deal with the second cause. This was clearly espoused by the hon. Member for Sowerby (Mr. Thompson), and relates to the determination of the Conservative Party to use the slump to make working people pay for the crisis and to restore profit margins in order to return to the sort of society that existed in the early 1930s.
There are two obstacles confronting the Government that must be dealt with. The


first is the level of public expenditure, brought into being in order to attempt to create a fair society. Many hon. Members have quoted Harold Macmillan, but even he, in his book "The Middle Way", in 1939, called for a planned economy in order to eliminate unemployment for ever. That is well to the Left of the 1979 Labour Party election manifesto on which I was elected to the House.
Harold Macmillan clearly understood that public expenditure under all Governments contributes to the enjoyment of higher living standards. It also helps to finance the Welfare State. That is now to be cut back, because to the Conservative Party it is an obstacle to the restoration of profit margins and the kind of society to which it is committed.
The second obstacle to the Prime Minister's declared objectives is the trade union movement, because, organised under legislation provided by successive Parliaments, it protects working people from the sort of injustices that they suffer in areas where trade unionism is weak or non-existent. We have only to look at the wages and conditions enjoyed by the catering trade, or at any of the areas of sweated labour, particularly those in which there is a high immigrant population and where trade unions are nonexistent, to realise that such wages are a disgrace to a civilised society. Therefore, the Conservative Party takes the view that the alleged power of the trade union movement must be broken if profits are to be maintained.
The Government have adopted three methods of tackling that problem. The first is to raise unemployment by their policies and to blame high wage increases for that rise. It must be obvious to anyone who has bothered to read a newspaper or listen to a news item on the radio or television that the Tories would blame unemployment on the lazy, unproductive workers who, as far as they are concerned, consistently bargain unrealistically for high wage settlements. Their idea of "high" is 9·6 per cent., "unrealistic" 14 per cent., and even the 2 per cent. offered to British Steel workers had massive redundancies tagged on to it.
The main argument used by the Conservative Party in support of wage restraint is that the alternative is mass unemployment. But the facts indicate the

opposite. The record shows that unemployment has grown through periods of wage restraint. Significantly, the first time that the figure of 1 million unemployed was reached since the 1930s was in 1961, and that coincided with Selwyn Lloyd's wage pause.
The first significant drop in unemployment since 1966, estimated at approximately 150,000, coincided with a breakthrough in wages following the victories of the miners, railwaymen and shipbuilding workers. It was the increase in earnings in 1972–73 of about 16 per cent., as against an inflation rate of 10 per cent., that boosted real take-home pay, in conjunction with the extra spending power made available by the previous Budget, that helped to create economic expansion and a drop in unemployment. The rocketing unemployment in the 1970s took place in a period of almost continuous wage restraint—engineered, I have to admit, under both a Labour and a Conservative Government.
The second part of the Government's strategy is to legislate to break the established power of the trade unions and to make organisation as difficult as possible—if not impossible. It is not unexpected that with the return of a Conservative Government the trade union question is again at the centre of the political stage. But to suggest, as some Conservative Members have suggested today, that trade unions now have the whip hand and that employers are hemmed in by a combination of trade union power and legal restrictions is to stand reality on its head. The old power relationship still exists. Employers hire and fire, they increase prices, particularly after wage settlements, they reduce output through lack of investment, they sell up assets, and they invest overseas to exploit cheaper and badly organised labour. To suggest that employers cannot run their businesses in order to meet their shareholders' aspirations because of trade union power and pressure is to fly in the face of reality and completely to misread the balance of power in British society.
The Government's Employment Act is wrong in principle and it is largely unworkable in practice. Unless the Government are forced by a Labour movement to come to their senses, we shall have a recipe for industrial chaos.
The third part of the strategy pursued by the Government is that mass propaganda poured out by Fleet Street, the BBC and ITN, which daily fail in their charter obligations to give a balanced view of the efforts of working people as against those of capital. In no way is that better exemplified than in the Cobden Trust lecture given by Professor Stuart Hall, when he clearly outlined the misuse of the media.
The Government have argued that the Labour Party has offered nothing. The city of Dundee, controlled by a Labour district council, organised a conference last Thursday to which they invited Members of Parliament, business men, union officials, bankers, academics and councillors from district and regional authorities. They put forward constructive proposals to help the city of Dundee. We do not expect from the Government a continual attack on the trade union movement and workers determined to restore the value of their earnings. We expect a response of the type shown by the Dundee district council. I hope that we get that sort of response tonight when the Secretary of State replies to the debate.

Mr. Richard Needham: I should like to comment on the problems of youth unemployment. I have listened without success for contributions from Labour Members, with the exception of the hon. Member for Newcastle-under-Lyme (Mr. Golding), for practical suggestions on the horrific problems of youth unemployment. Perhaps the right hon. Member for Ebbw Vale (Mr. Foot) will give us some practical suggestions about youth unemployment—although, looking at his record, we shall probably get more flights of rhetoric than anything that will help.
Perhaps one of the reasons why one does not get much basic assistance in practical ways in helping young people is that the paymasters of the Labour Party have shown years and years of intransigence when it comes to dealing with the problems of young people. If Opposition Members do not believe that to be true, why is it that youth unemployment continued to grow, year in and year out, when they were in power, regardless

of the ad hoc measures that they have introduced?
I am not blaming only the unions for this problem, and it is not me alone who has that view. In an article in The Observer on Sunday, a Mr. More, a Birmingham polytechnic lecturer, said how angry he was at the "lack of concern" shown by most trade unions for the unemployed:
In one case of imminent local redundancies, the union refused to have anything to do with a project on the ground that to think positively about what might happen to the victims of a closure was somehow to encourage that closure. Historically trade unions have only cared for those in work.
I do not think that any fair-minded judge of the situation could deny that to be a truth. One has only to look at the 1930s to appreciate the disgraceful way in which trade unions treated the unemployed.
In terms of young people, equally there is considerable short-sightedness on the part of many employers, who, as soon as hard times come, cut back on their training and apprenticeship schemes, with the result that as soon as an upturn in the economy comes they find that they do not have enough young people sufficiently trained.
On the Government's part, there has been a lack of imagination and flair going back many years in the design of schemes for young unemployed people. It has all been done on an ad hoc basis in the belief that sooner or later, and with wishful thinking, the economy would look up and the problem would go away. In fact, the problem is deep rooted and is likely to be with us for a very long time.
There is some way out of this if only there were good will and a real determination on all sides to get to the basis of the problem. Why cannot young people of 16, 17 and 18 be taken out of collective bargaining structure which, has meant that their basic wage rates have made them unemployable in many instances and unattractive to so many employers? Why cannot we introduce, as other countries have, a national youth allowance which would mean that young people of 16 to 18, when they come out of school, could go into apprenticeships—which in this country are a disgrace; they should be expanded—and could provide many more roles


in our society for young people than they do now instead of the very narrow apprenticeship schemes which currently exist with union backing? There needs to be an incentive for a youngster to go into an apprenticeship instead of seeking a job which gives him no skills at a higher wage. If he can get into a apprenticeship, at the end of three years he will have a skill which can take him through many years of his life.
That should be the start. It does not need to cost the country any more money than it spends now. If young people cannot go into normally paid jobs, negotiated at union rates, and instead go into apprenticeship schemes which start, say, for the 16-year-olds at £35 a week, and then go to £45 and £55, that will allow them to go into full-time work at the age of 18, the same can apply to those who want apprenticeships and cannot find them. They can also, through Government assistance, through an expanded youth opportunities programme, start on a sliding scale at, say, £23—or even less, £20—at 16, £30 at 17, and £40 at 18, to learn skills and trades which they do not have now.
That is the sort of scheme which, if the Government could sit down with the TUC, the CBI and other interested employers, could start to make a dent in the horrific problems facing young people. Once again, young people would become attractive to employers to take on.
Of course, the unions would have to make an input. There would have to be safeguards against people taking on youngsters and using them as cheap labour or as a way of stopping others coming into work. However, having said that, where there is a will, there must be a way.
If my right hon. Friend the Secretary of State looks into such a scheme and gets together with the TUC and CBI, they will find that there must be a community of interest. Everyone in the country must realise that taking young people off the streets and giving them training and jobs is in everyone's interests. I hope that my right hon. Friend will consider this scheme. I hope that he will talk about it and act upon it to ensure that young people have a practical opportunity in life that is currently denied them.

Mr. Jack Dormand: I welcome the opportunity to make a few remarks. In view of the time, I shall not comment on the national position, but will confine myself to three quick references to the Northern region.
It might have escaped the notice of some hon. Members that not one Tory Member from the Northern region has been present during the debate. That is a scandal. If their absence has escaped the notice of some hon. Members, it will not escape the notice of those in the Northern region. It means either that they are satisfied with the Government's policies, or that they are so complacent that they think that they need not attend. I suspect that they are political cowards. They are afraid to take part in the debate. We are talking about the region that has the highest number of unemployed in the country. I regret to say that that has always been the position, even from prewar days. I hope that the Secretary of State and the Under-Secretary of State will take some notice, even if their hon. Friends from the Northern region are not present.
Last year the Secretary of State for Industry told us about his new regional policy. The nub of that policy was that the money available under the development grant system would be concentrated in the area where it was most needed. That meant that many areas in the Northern region had their status from that of special development areas. That policy has been a complete failure. It is all right in theory, but it is one of the ideas that emanated from the ivory tower in Victoria Street. It has led to a complete lack of business confidence in the Northern region. We have a devastated region in an area that has the best industrial relations in the country.
Secondly, I draw the attention of the House once again to the need in the Northern region for a Northern development agency. I and my Northern colleagues do not expect that such an organisation would work miracles, but we say that there is a great need for it. I hope that Ministers will listen to my remarks. They pay fleeting visits to the region to keep the natives quiet. I say to them in all straightforwardness that the people of the region regard their visits as examples of condescension. They come to the region


for an hour or two, but no action results. I hope that they will take some notice of what is said in the debate by Northern Members.
The Secretary of State for Industry has, I am delighted to say, changed his mind from saying last year that there was no possibility of a development agency, to saying that he is now prepared to consider it. He is paying us the courtesy of meeting some of my hon. Friends and myself to discuss the matter. I hope that the issue will be borne in mind and that it will make a contribution to reducing unemployment in the region.
The Government have now received the Rayner report, part of which relates to Department of the Environment and Ministry of Transport offices in the Northern region. The proposal is to take them to Leeds. That is unacceptable. It means a loss of 200 jobs and a lack of communication. That is an example of how the Government regard the Northern region. Do they think that Leeds is in the region? I hope that they will have second thoughts.
I hope also that the Government will pay more attention to the coal industry, as it is one of the main employers in the Northern region. The Coal Industry Act was enacted just before the recess, but it gave help neither to the country nor to the Northern region. The Government have placed a financial straitjacket on the mining industry, which could quickly lead to high unemployment in the industry. My area has the most reasonable men. The area is strike free, and the men are willing to co-operate with the National Coal Board and the Government as long as those bodies do the right things. I hope that the Secretary of State will pay particular attention to the needs of the coal industry.

9 pm

Mr. Michael Foot: If the Opposition had had their way, this debate would have occurred last month, when the figures for unemployment were announced. At that time, we wrote to the Prime Minister and asked for Parliament to be recalled in order to discuss the unemployment figures. The right hon. Lady the Prime Minister replied to my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) suggesting

that there had not been any fresh developments since the unemployment debate in July, and that it was not necessary to recall Parliament.
In our view, the figures published in September and the more recently published figures, together with other events to which hon. Members in all parties have referred, indicate that the country is slithering into an industrial and economic disaster of greater dimensions than we have seen for a long time. We have not had to face a disaster of such dimensions since the end of the war, and that is why the House should show special determination and devise special means by which we can more frequently discuss the unemployment situation.
Unemployment debates, in one form or another, should take place every month, when the figures are announced. My hon. Friends would then be able to develop their views about different parts of the country. My hon. Friend the Member for Easington (Mr. Dormand) and other of my hon. Friends can speak with expert knowledge on the subject. The unemployment crisis facing the country is so critical that the House of Commons should resolve to have a major debate on unemployment every month. That was the origin of our request to the Prime Minister, and we repeat it tonight.
I have listened to most of the debate. Speeches from hon. Members on both sides of the House have illustrated clearly, and in a variety of ways, that the economic crisis is serious. Whatever test one chooses to apply, whether that of the scale of the problem or that of the novelty of the problem, we face a more serious economic crisis than we have faced since 1945. In the past, it has been the stock-in-trade of Ministers to point out that unemployment increased under the Labour Government. I do not blame them for saying that. They imply that the problems and the solutions are much the same now as they were then.
We face a very different state of affairs. We cannot deny that unemployment rose under a Labour Government. We cannot deny that it rose steeply. We undertook a series of measures to deal with it, and we had begun to bring down the unemployment rate. If the Conservatives were able to show similar figures over the past six or eight months to those we were able to show during our last year in office. they


would have something to shout about. They would claim that such figures represented the height of statesmanship and achievement. But of course they cannot say anything of the sort. I hope that the House will not try to disguise the fact that the nature of the unemployment that is affecting every part of the country is much fiercer than anything we have had for a long time.
I am sorry that the right hon. and learned Member for Hexham (Mr. Rippon) is not here because he emphasised this point in his broadcast yesterday. It is not only the old industries that are being affected. The Prime Minister sometimes talks as if it is just a question of accommodating the decline in the old industries. But that is not so. The young industries are being hit in this recession in the same way as the old In my constituency it is not just a question of the steel industry being in great difficulties or that workers are on short time; new industries are suffering as well. These industries were brought into the area and they are now feeling the effects as much as the old. They are hit by a combination of international events and Government policies to such a degree that it is thought that the only business at present is money lending. That is what the right hon. and learned Member for Hexham said. and I believe that that is generally true.
The situation is deteriorating much faster than anyone had previously assumed. Also, the prospects are grim. This coming winter will be a winter of fear and desolation for our people. Those are not just my views. They are the views of the CBI. It says:
We are now in a much more serious recession than that experienced in 1974–75. We would have to go back to before the war to find industry in comparable difficulties … Have we got to go through the next three or four years destroying great tracts of British industry to convince the world that sterling is overvalued?".
These are the sorts of statements that come from the CBI. When the latest report from the CBI reads rather like the front page of the Tribune, perhaps we are moving very fast. I got the impression from many of the speeches of Conservative Members, such as that of the hon. Member for Macclesfield (Mr. Winterton), that the only people in the country who

did not really know what was going on were those in the Cabinet—or perhaps I should be more generous and say halt those in the Cabinet.
I gather that the Prime Minister is not so much impressed by these events because she insists that the policy will not he changed. The lady is not for turning. [HON. MEMBERS: "Burning."] No, let us not have any misquotation. The lady is not for turning. I suppose that we have to change the old adage—if mother does not turn, none of us will turn. Is that the message that we are sending out from this House today? I do not believe that that is the case. I think that the Cabinet is in a slightly different mood from that.
We read in the newspapers that the Cabinet is to discuss these matters and possibly some aspects of public expenditure cuts tomorrow. I should like to intrude into that meeting, if I may, and offer my assistance to those sections of the Cabinet that deserve it.
The Secretary of State for Employment is sometimes represented as a good man who fell among monetarists. I would not go as far as that. I shall come back to him in a moment. At any rate, I am chalking him up on my slate as one of the good ones.
Now let us look at the others. The situation has changed in the last few weeks. The Secretary of State for Defence—I do not know whether he is here—is a formidable member of the Cabinet. He gets almost as big ovations at Tory conferences as the Prime Minister—and we know that is no accident. The right hon. Gentleman has a powerful voice in the Cabinet. If he were to turn himself into the field marshal for the wets, that would cause quite an event, because some of the others might pluck up their courage, too. That is two of them.
Where is the Lord Privy Seal, the philosopher Tory—as H. G. Wells said, like military intelligence, a contradiction in terms? His contempt for Tory policy is so determined that they all know it. That is three.
Now there is the Leader of the House. We are told that at a fringe meeting at Brighton the Leader of the House came out in his true colours. We can imagine


what a gaudy performance that would have been.
Now let us look at some of the others. Where is the Secretary of State for Scotland? He must know what is going on, so we count him on that side.
What about the Secretary of State for Wales? Which side is he on? Maybe they do not count him.
Where is the Minister of Agriculture, Fisheries and Food? We have always counted on him. The Minister of Agriculture—I am very friendly with him; he has my old driver, and that is my trouble—[Interruption.] I shall soon get one back. The Minister of Agriculture takes the same precaution as his right hon. Friend the Member for Sidcup (Mr. Heath): he does not turn up at these debates. He finds it easier to vote for them if he does not have to listen to them. The right hon. Gentleman—[An HON. MEMBER: "Where is he?"] I shall tell the House where he is and what will happen. Tomorrow there will be a pious public relations office notice issued by the Ministry of Agriculture saying that, of course, the Minister of Agriculture was in the House of Commons but he was in his room working on his papers. I bet that is not what he is doing. The right hon. Gentleman is upstairs saying that he does not believe in this monetarist malarky any more than we do. So we count him on our side; he is one of us. I am sure that the Secretary of State for Employment will confirm that.
What about the others? If the Lord Privy Seal is one of the wets, we ought to be able——

Mrs. Elaine Kellett-Bowman: Will the right hon. Gentleman give way?

Mr. Foot: I shall come to the hon. Lady in a moment. I shall get her promoted in a moment if she will listen.
The Foreign Secretary is an influential chap. I dare say that he is a bit persuaded by the Lord Privy Seal. In passing, there was a report the other day that one of the public expenditure cuts to be imposed tomorrow is a cut in the British Council.
The greatest possession of this country—more valuable than North Sea oil—is the English language, which is becom-

ing the language of the world. At such a moment this penny-pinching Government are about to injure the processes whereby people throughout the world can acquire the right and capacity to speak English. However, I believe that the Foreign Secretary can be persuaded on to the side of enlightenment in the discussions tomorrow.
Whom does that leave? Where is the Home Secretary, the long-playing vice-captain? I suppose that we can add him to the list. I have a card here. I should like to add up the figures. It is a very close thing indeed. However, maybe that is another kind of election. I shall leave that for the moment. At any rate, it is very close indeed. We have a good chance of winning.
I am sorry that the Home Secretary is not here, because I should much rather say this to his face. He may consider that these financial questions are a bit beyond him now. If he has to listen to the Chancellor of the Exchequer at the peak of his form, as he was today, I am not surprised that he does. I have noted the right hon. and learned Gentleman's words carefully. He says that the high rate of the pound is not an objective of policy. Can he tell us whether anything that is happening in the country at present is an objective of policy? Unemployment has not been created on purpose. What about inflation? The Government are conquering inflation, but we should not know that if they did not tell us so. The right hon. Lady will not answer this question tonight, but perhaps she can think up an answer for tomorrow. How long does she believe it will be before she gets the inflation rate down to what it was before she started putting it up? I do not know whether the Government have an answer to that question.
The seriousness of the situation is that the Government, I believe, want to apply their minds to the problem. The Cabinet tomorrow will be quite a serious affair. I hope that I have contributed a little to its understanding. I hope that there will be people there to speak for Wales, Scotland, Northern Ireland, Merseyside, the North-East, the Midlands, London and Lancashire—to speak for Britain, for all the places that need a voice to speak for them.
The only people who seriously believe in the policy that the Government are


pursuing is the diminishing little band headed by the right hon. Lady. I sometimes feel that, when the right hon. Lady stands on the burning deck all alone at the end, the only person who will be supporting her will be the Minister for Social Security. I have warned the right hon. Lady before. Does she not realise that we have put him here as an agent provocateur in order to test what damn fool statements can be made in Tory Governments? I warn the right hon. Lady that she needs a few better companions around her if she wants to deal with unemployment.
I realise that I have discriminated in favour of the wets. I have revealed to the House quite openly, as I would normally do, who are my favourites, but I should not like to miss out the Secretary of State for Industry, who has had a tremendous effect on the Government and our politics generally. As I see the right hon. Gentleman walking around the country, looking puzzled, forlorn and wondering what has happened, I try to remember what he reminds me of. The other day I hit on it.
In my youth, quite a time ago, when I lived in Plymouth, every Saturday night I used to go to the Palace theatre. My favourite act was a magician-conjuror who used to have sitting at the back of the audience a man dressed as a prominent alderman. The magician-conjuror used to say that he wanted a beautiful watch from a member of the audience. He would go up to the alderman and eventually take from him a marvellous gold watch. He would bring it back to the stage, enfold it in a beautiful red handkerchief, place it on the table in front of us, take out his mallet, hit the watch and smash it to smithereens. Then on his countenance would come exactly the puzzled look of the Secretary of State for Industry. He would step to the front of the stage and say "I am very sorry. I have forgotten the rest of the trick." That is the situation of the Government. They have forgotten the rest of the trick. It does not work. Lest any objector should suggest that the act at the Palace theatre was only a trick, I should assure the House that the magician-conjuror used to come along at the end and say "I am sorry. I have still forgotten the trick."
We face a serious situation which, in some respects, is even worse than the

1930s and we have a Government who have learnt none of the lessons of the 1930s. We have to teach them. The way that our politics are to develop will depend first on what happens within the Cabinet and the Conservative Party. The troubled mind in the Conservative Party is widespread. Everyone who has listened to the speeches of Conservative Members can see that it is becoming very widespread. I am so generous that I will not even ask those Conservative Members who agree with the Government's policies to put up their hands. I do not believe that we would get even the few who enthusiastically obeyed on the previous occasion.
The disbelief does not exist only among trade unionists, Labour supporters and those in the sort of constituency that I represent. Throughout the country there is a rising disbelief in the policy that the Government are pursuing. If the right hon. Members that I have mentioned could capture a few more allies, it would be possible for them to change the situation, though that would not transform the whole industrial situation. The damage has gone so deep that it will be difficult to reverse it.
In addition, the cuts in public expenditure have not yet had their full effects by any means. We all learn from our own constituencies and I was horrified last week not only to hear what is happening in the steel industry, where most of those who are still at work are kept there by the compensation scheme and are on short time, but to discover that those working in new factories are having to face short-time working and the prospect that their industries may also have to close. If Conservative Members go to any industrial area they will discover that the disbelief in their policies is widespread among managements, workers and everybody else.
What will happen if the Cabinet manage to say that the lady must turn? That will not solve everything; I agree with my right hon. Friend the Member for Leeds, East (Mr. Healey), who said that earlier in the debate. However, it will assist, and the sooner we can get it, the better. If they do not succeed in that, they will all go down, because in the meantime we shall organise the biggest protest campaign that this country has


seen since the 1930s. We shall have a campaign from one end of the country to the other.
We shall fight the Government here in the House and outside. Shall we call it a Midlothian campaign? It will be against the atrocities of unemployment this time instead of the other atrocities against which Mr. Gladstone campaigned. I remind the House that when he embarked upon his Midlothian campaign Mr. Gladstone was 68 years old. I must inform Conservative hon. Members, who may not be aware of the facts, that Mr. Gladstone lived thereafter to form three—or was it four?—separate Administrations. So there is hope for all my hon. Friends, including my right hon. Friend the Member for Leeds, East.
I hope that in that campaign we can combine other great themes. I believe that in the course of the campaign we shall be able to restore hope to our people, because there is no future for our country in the gospels of despair, in the doctrines of mass unemployment, in the idea that the way in which people can be made to work is by being whipped to work, whether by whips or scorpions.
What we must restore to the country is the proper sense of community in dealing with this great crisis. Just as in the greatest crises of our country in this century it was the Labour movement that came to the rescue, so it will be on this occasion too. We give due notice to the Conservative Party that we intend from this moment on to rouse the country from one end to the other and to ensure that as soon as the opportunity comes we get not merely what we had for five years—a tender, difficult situation with a majority one day and no majority the next—but the full majority to carry through the democratic, Socialist reforms that this country requires.

The Secretary of State for Employment (Mr. James Prior): No one will doubt that we have listened tonight to a brilliant speech by the right hon. Member for Ebbw Vale (Mr. Foot). It was a brilliant speech, but not one second was devoted to a policy that should be put to the country, one that the right hon. Gentleman would have put to the country.
Before he could do so he would have to agree with his right hon. Friends, with whom, apparently, he had very little agreement during six years of office. If I understood the right hon. Gentleman correctly, what he was denying was the last six years of Labour Government.

Mr. Foot: indicated dissent.

Mr. Prior: The right hon. Gentleman was supporting his right hon. Friend the Member for Bristol, South-East (Mr. Benn), who this afternoon made a speech that I never dreamt I should hear in the House. I do not think that many Labour Members who heard it were very pleased with it either.
This has been a serious debate, befitting a deep and serious national problem. I would be utterly misleading if I did not say that there was still a difficult period for this country to go through. This was brought out in a number of speeches on both sides of the House, none more surprising, perhaps, than the contribution of my hon. Friend the Member for Macclesfield (Mr. Winterton) who informed me that he would be unable to be present for the winding-up speech. I mention also the speeches of my hon. Friend the Member for Sowerby (Mr. Thompson) and those of the hon. Members for Dundee, East (Mr. Wilson), for Central Ayrshire (Mr. Lambie) and for Antrim, North (Rev. Ian Paisley).
Listening to Opposition Members, one might be forgiven for thinking that unemployment began only in May 1979. Given the old parliamentary performer that he is, the right hon. Member for Ebbw Vale tried to discount that factor in advance. There was, however, a time in August 1977 when unemployment reached 1,635,000. The right hon. Gentleman made a characteristic speech. The further the distance that he puts himself from the experiences of government, the more eloquent he becomes. He will soon become as eloquent as many of us recall his being when he used to sit on the Front Bench below the Gangway.
The right hon. Gentleman is already forgetting many of the hard lessons that he had to learn when he was a Minister of the Crown, none harder, perhaps, than the fact that when he went into St. James's Square as Secretary of State for Employment, unemployment was just under 600,000. At that time the right hon.
Gentleman said that he would fight with every breath in his body against unemployment. When he came out of St. James's Square two years later, unemployment had doubled to 1·2 million. Has he forgotten that? Has the right hon. Gentleman also forgotten that unemployment went up considerably in his constituency during the time that he was a Minister? Has he forgotten how difficult it is for Ministers, or for others, to prevent unemployment from rising in certain circumstances in their own constituencies? No one knows that better at this moment than I do. I understand very well the feelings of many hon. Members who have spoken in the debate. They feel, as I do, the harsh facts of the unemployment situation.
The right hon. Member for Leeds, East (Mr. Healey) and the hon. Member for Colne Valley (Mr. Wainwright) suggested that we should pump more money into the economy. My hon. Friend the Member for Bristol, West (Mr. Waldegrave) made it plain that he felt that one cannot expand out of recession simply by throwing money at the problem.
The right hon. Member for Leeds, East had a good deal to say about the growth rate. He said that we had not achieved the 3 per cent. growth rate in manufacturing industry that was achieved, I think in 1978, under a Labour Government. I shall concentrate on manufacturing industry, because that is the important consideration. The GDP is to a certain extent helped by oil. I want to stick to manufacturing industry to illustrate this case.
By 1978–79, in manufacturing industry, we were still a long way short of what we had achieved by 1973. It is no good the right hon. Gentleman claiming that after six years of Labour government we could have got out of our unemployment problems and our problems of public borrowing by growth alone.
The right hon. Gentleman asked me about the likely unemployment level. He said that, if we kept growth at 3 per cent., we could solve our problems. That is precisely what he said in 1976. He said then that unemployment would be down to 3 per cent., or 700.000, by 1979. However, unemployment doubled. It is not quite so easy as Opposition Members now make out to achieve the growth in

the economy that brings down the level of unemployment.
I shall not play that game. I shall not put out a series of wildly optimistic figures of the kind put out repeatedly by the right hon. Member for Leeds, East:
The fact is that no one can predict with any hope of accuracy the path of unemployment over the next few years … the key to an improvement in our unemployment prospects must lie in the performance of our manufacturing industry, in increasing the volume of our exports, and in countering the penetration of our domestic market by foreign imports.
Those wise words on the perils of making any forecasts are not mine. They were said by the right hon. Member for Leeds, East when he was Chancellor of the Exchequer. In view of his present preoccupations, I intended to spare him embarrassments this evening. However, I have omitted from that quotation a passage in which he voiced his total agreement with the present Chief Secretary, whom he quoted favourably as saying:
It simply does not lie within the capability of Government to give employment targets."—[Official Report, 21 December 1976, Vol. 923, c. 499.]
That is why I am not prepared to give an employment target or a forecast tonight.
I have tried to indicate the magnitude of our task. Unemployment was very high during the years of the Labour Government. They found that they could not solve the problem simply by pumping in more and more money. If we ever had another Labour Government, and if a member of it was the right hon. Member for Bristol, South-East, they would not have to worry about the exchange rate: within 24 hours there would be such a run on the pound that the bottom would fall out of the exchange rate.

Mr. Robert Maclennan: The question which the Secretary of State was asked to answer earlier was not about the Government's target for unemployment. The question was that put by the general secretary of the TUC, namely, what level of unemployment the Government would consider to be unacceptable before they turned and adopted other policies.

Mr. Prior: What other policy is there to follow? We have not heard a valid policy from the Opposition today. The Government will stick to their policy.
Nothing produced by the Opposition today has given us any reason for changing it.

Mr. Eric S. Heffer: Will the right hon. Gentleman give way?

Mr. Prior: No, not now.
No mention has been made by Opposition Members of where they would find the money. The right hon. Member for Bristol, South-East at the Labour Party conference described a plan which he described again today, and which Shirley Williams says would cost at least £10,000 million. When the right hon. Gentleman was asked by the right hon. Member for Down, South (Mr. Powell) where the money would come from—from more borrowing, from more taxation or from just printing money—he did not answer. Of course, he knows perfectly well that it would probably be something of all three, and that the result would be completely disastrous.
Over the past 20 years we have moved to a position of steadily worsening unemployment. There have been structural changes, with more women and young people coming on to the market. We are less competitive as a nation than we were 20 years ago. Other nations have been far more successful than we have. There has also been a growth of the lesser developed countries, such as Korea, Singapore and Taiwan, which have taken quite a bit of our markets.
Step by step, unemployment in Britain has increased. In 1963, at its peak, it was 500,000. In 1968 it was more than 500,000. By 1972 it was 900,000, and by 1977 it had reached 1·4 million. That is the magnitude of the task that faces this country, and it is not much good saying that the old remedies that we have tried repeatedly, with the best of good will, are likely to succeed this time round. The nation and the House might now start to face up to this issue.

Mr. Heffer: The right hon. Gentleman has referred to the past 20 years and to various statements by my right hon. and hon. Friends. May I draw his attention to the television discussion the other evening with Mr. Harold Macmillan, who made it quite clear that the Government's deflationary policies were causing unnec-

essary hardship? If the right hon. Gentleman is prepared to listen, it might be important for him and his right hon. and hon. Friends to listen to one of their former Prime Ministers, whom they regard as one of their most successful. He condemns completely the deflationary policies that the Government are implementing as causing unnecessary hardships.

Mr. Prior: I am second to none in my admiration of Mr. Harold Macmillan, but if I continue my speech it should become clear to the hon. Gentleman why I do not believe that our position now is in any way comparable with that of 20 years ago. Above all, we have to recognise that the oil price rises of 1973–74 and of 1979 have caused a fundamental change in the balance of world prosperity. Cash has been concentrating and accumulating in the hands of a few major oil exporting nations far faster than they can use it for purchases from the industrialised countries. As we know, the difficulties of many developing countries have also been compounded. Much of this cash is not available for lone-term investment. It is hot money that has been sloshing around the world from one market to the next. That fact, combined with all the uncertainties of Middle East instability, has had and will continue to have a profound effect on employment levels in Western Europe.
We are not the only country to suffer. Unemployment in Belgium is 10·5 per cent., in Italy 7·8 per cent., in Canada 7·6 per cent., and in Ireland 9·3 per cent. One of the few countries that are avoiding a high rate of unemployment is Germany, and that is one of the countries that has kept its inflation under control. Germany above all recognises the effects that high inflation had on its democratic processes in the 1920s. As a nation we must recognise what has happened in the past few years with the world balance of trade and its effect on our unemployment.
A number of comments were made by my hon. Friends about the public sector. They related to the problems of inflation and the public sector increasing the borrowing requirement of the Government. When we entered office we picked up a number of post-dated cheques that had resulted either from promises made to go to Professor Clegg or promises made


to honour Professor Clegg's recommendations. Are the Opposition now saying that, having established Professor Clegg and bought themselves out of strikes in the winter of 1978–79, they intended to dishonour their promises? We honoured those promises, and they cost us £2,000 million. That stage is now past. We cannot continue to pay the public sector at the rate that it has been paid in the past two years. Every 1 per cent. of increased public services sector pay costs £300 million. If we are to have a fair balance between the private sector and the public sector we must get public sector pay at much lower levels. People in the public sector recognise that they have as big an obligation as anyone else to try to help those in the private sector, many of whom have been thrown out of work.
Hon. Members asked about the use of oil revenues. That question was raised a number of times during the debate. Last year revenues from oil amounted to about £2.2 billion. This year they will amount to about £4.1 billion. They are part of the Government's revenue and are used for a number of purposes.
Let us take four basic British industries—steel, shipbuilding, coal and British Leyland. This year those four basic industries have taken in investment, in losses, for redundancies and for social purposes a figure of at least £2,250 million. Never let it be said by Opposition Members that we have not given support to basic industries in Britain when we are subscribing cash to that amount. It helps with employment, but it is a painful decision to take because, as we all know, it robs other industries and people of employment, much of which could be in newer industries where perhaps the demand for goods could be greater. Let not the right hon. Member for Ebbw Vale say that we have not put every bit as much money into the steel industry for the right purposes as he ever did. If the previous Labour Government had taken the steps with the steel industry that they should have taken, it would not be in its present mess.

Mr. Foot: If only the Secretary of State had put money into the steel industry when we told him to do so he would never have had a strike. He would have saved £400 million.

Mr. Prior: Had we had a bit more backing from the Opposition at that time we might not have had a strike, either. The encouragement that they gave to go for unrealistic wage settlements, as they always have done, has been one of the great problems from which we have suffered.
In the last 10 minutes of the debate I wish to say something about the temporary employment measures and pick up some of the points that have been made about apprenticeships and what we are doing for youth, as well as the questions raised by the hon. Member for Newcastle-under-Lyme (Mr. Golding) about the long-term unemployed. Through these special employment measures we can provide opportunities for temporary work or training, particularly for the young, and we can assist companies with a genuinely long-term future to overcome difficulties in the short term.
I announced in February this year that the Government would make money available for an expansion of the special employment measures. At that time we were keeping an estimated 205,000 people off the unemployment register—compared with 170,000 in May 1979. The very latest figures for September show that the total of those being kept off the register has risen to 234,000. A total of 477;000 people are now receiving help under the Government's measures. In the course of the current financial year, we shall spend £530 million in gross terms on these special measures, although the total is less than that if one takes the net figure.
Much has been said, and we share the concern, about the depressing and demoralising effect of long-term unemployment on school leavers. In February I said that the MSC would expand the number of filled places in the youth opportunities programme to 105,000. In fact, 135,000 young people are already in the programme. Last month alone, the figure rose by 20,000. I also said at that time that 250,000 young people would enter the programme in this financial year. In fact, by March the number of young people entering the programme during the financial year will be nearer 300,000. If the hon. Member for Keighley (Mr. Cryer) finds that boring, he ought to go out of the Chamber, because half the problems raised in this debate have


centred on the problems of young people, and I am trying to show how the Government are dealing with them.
Therefore, nearly 300,000 people will be helped this year, and by next March I expect to be able to say, as has been said in each of the last two years, that the MSC has substantially met the undertaking that no Easter or summer school leaver from this year should remain unemployed by the following Easter without the offer of a suitable place in the programme.
Each week the media give a lot of publicity to redundancies—the ITN, The Sunday Times, and so on. They do not point out that the number of young people being absorbed into the youth opportunities programme has been increasing by 2,000 a week and that in the month of September alone it was increasing by 5,000 a week. All these measures remain open until March 1981.
We have been considering the future of the special measures. I saw the MSC the week before last. I took note of its comments, and I am discussing its proposals with my colleagues. I hope to announce the results of the annual review shortly.—[HON. MEMBERS: "When will you get the money?"]. I think that I shall be a lot more successful in getting the money from my colleagues than the right hon. Member for Chesterfield (Mr. Varley) ever was. Not only could he not get the money; he did not want the money. He wanted to let Chrysler go to the wall. He was not interested in money.
I turn to the problems raised by the hon. Member for Newcastle-under-Lyme. At present there are about 340,000 longterm unemployed persons—about the same number as there were when we took office, or when the previous Government left office. Let us get that straight. As the House knows, it is not possible, and it would not he possible, to provide jobs for all those people through schemes. The Labour Government did not do so, and Labour Members know that it is not possible to do so. What is more important is that we should seek to provide proper jobs, and not simply make jobs. Further, I believe that we can and should concentrate a great deal more on trying to help the

voluntary organisations to use voluntary labour where it is available and wishes to help.
The hon. Member for Colne Valley asked about apprenticeships. Last year the Government aided 21,000 apprenticeship schemes. This year we are financing 25,000 young apprentices. However, during the next few weeks I hope to bring forward further proposals—not necessarily involving more money. [Interruption.] I do not think that one solves every problem by throwing money at it. Immediately we talk about training Labour Members think that we have to spend more money. We have been spending vast sums of money on training over the last few years, and even under the previous Government, with all the problems of unemployment, there was still a shortage of skilled labour. A problem is not solved just by money; it is solved by better organisation.
We face a difficult time. Great anxiety has been expressed from both sides of the House and yet there has been a remarkable degree of co-operation and understanding between management, workers and unions—more so than would have been predicted as possible, and perhaps more so than Labour Members recognise. Out of adversity have come real and solid improvements in productivity and many signs of growing understanding on the need for wage restraint. There has been restraint on the part of workers, not only to save their jobs, but in the knowledge that they can help to save others and to create new jobs.
Over the next two or three years we need to resolve, as a nation, that as we emerge from this recession, as we will, we do not slide back into the same old methods that are the cause of our present problems. A combination of greater productivity and buying the better British goods that we produce can transform our position. I hope that a sufficient number of hon. Members will support British Leyland in the future and not find it necessary to drive around in foreign cars or to buy foreign goods—[Interruption.]

Mr. Bob Cryer: You voted against British Leyland twice.

Mr. Prior: Better goods, completed at the right time with the right design and


at the right price are the answers to our unemployment problems. For years we have been importing other countries' unemployment. That has to stop. My message to hon. Members tonight is to support the Government in the Lobby,

because only our policies can put this country right.

Question put:——

The House divided: Ayes, 252, Noes 308.

Taylor, Mrs Ann (Bolton West)
Walker, Rt Hon Harold (Doncaster)
Wilson, Gordon (Dundee East)


Thomas, Dafydd (Merioneth)
Weetch, Ken
Wilson, Rt Hon Sir Harold (Huyton)


Thomas, Jeffrey (Abertillery)
Wellbeloved, James
Wilson, William (Coventry SE)


Thomas, Mike (Newcastle East)
Welsh, Michael
Winnick, David


Thomas, Dr Roger (Carmarthen)
White, Frank R. (Bury & Radcliffe)
Woodall, Alec


Thorne, Stan (Preston South)
White, James (Glasgow, Pollok)
Woolmer, Kenneth


Tilley, John
Whitehead, Phillip
Wrigglesworth, Ian


Tim, James
Whitlock, William
Young, David (Bolton East)


Torney, Tom
Wigley, Dafydd



Urwin, Rt Hon Tom
Willey, Rt Hon Frederick
TELLERS FOR THE AYES.


Varley, Rt Hon Eric G.
Williams, Rt Hon Alan (Swansea W)
Mr. Joseph Dean and


Wainwright, Edwin (Dearne Valley)
Williams, Sir Thomas (Warrington)
Mr. Hugh McCartney.


Wainright, Richard (Colne Valley)

Division No. 480]
AYES
10. pm


Abse, Leo
Field, Frank
Marshall, Dr Edmund (Goole)


Adams, Allen
Fitch, Alan
Marshall, Jim (Leicester South)


Allaun, Frank
Flannery, Martin
Martin, Michael (Gl'gow, Springb'rn)


Alton, David
Fletcher, Raymond (Ilkeston)
Mason, Rt Hon Roy


Anderson, Donald
Fletcher, Ted (Darlington)
Maxton, John


Archer, Rt Hon Peter
Foot, Rt Hon Michael
Maynard, Miss Joan


Armstrong, Rt Hon Ernest
Forrester, John
Meacher, Michael


Ashley, Rt Hon Jack
Foulkes, George
Mellish, Rt Hon Robert


Ashton, Joe
Fraser, John (Lambeth, Norwood)
Mikardo, Ian


Atkinson, Norman (H'gey, Tott'ham)
Freeson, Rt Hon Reginald
Milian, Rt Hon Bruce


Bagier, Gordon A. T.
Freud, Clement
Miller, Dr M. S. (East Kilbride)


Barnett, Guy (Greenwich)
Garrett, John (Norwich S)
Mitchell, Austin (Grimsby)


Barnett, Rt Hon Joel (Heywood)
George, Bruce
Mitchell. R. C. (Soton, Itchen)


Beith, A. J.
Gilbert, Rt Hon Dr John
Morris, Rt Hon Charles (Openshaw)


Benn, Rt Hon Anthony Wedgwood
Ginsburg, David
Morris, Rt Hon John (Aberavon)


Bennett, Andrew (Stockport N)
Golding, John
Morton, George


Bidwell, Sydney
Gourlay, Harry
Moyle, Rt Hon Roland


Booth, Rt Hon Albert
Graham, Ted
Mulley, Rt Hon Frederick


Bottomley, Et Hon Arthur (M'brough)
Grant, George (Morpeth)
Newens, Stanley


Bradley, Tom
Grant, John (Islington C)
Oakes, Rt Hon Gordon


Bray, Dr Jeremy
Grimond, Rt Hon J.
Ogden, Eric


Brown, Hugh D. (Proven)
Hamilton, W. W. (Central Fife)
O'Halloran, Michael


Brown, Robert C. (Newcastle W)
Hardy, Peter
O'Neill, Martin


Brown, Ron (Edinburgh, Leith)
Harrison, Rt Hon Walter
Orme, Rt Hon Stanley


Buchan, Norman
Hart, Rt Hon Dame Judith
Owen, Rt Hon Dr David


Callaghan, Rt Hon J. (Cardiff SE)
Hattersley, Rt Hon Roy
Paisley, Rev Ian


Callaghan, Jim (Middleton & P)
Haynes, Frank
Palmer, Arthur


Campbell, Ian
Healey, Rt Hon Denis
Parker, John


Campbell-Savours, Dale
Heffer, Eric S.
Parry, Robert


Canavan. Dennis
Hogg, Norman (E Dunbartonshire)
Pavitt, Laurie


Cant, R. B.
Holland, Stuart (L'beth, Vauxhall)
Pendry, Tom


Carmichael, Neil
Home Robertson, John
Penhaligon, David


Carter-Jones, Lewis
Homewood, William
Powell, Raymond (Ogmore)


Cartwright, John
Hooley, Frank
Price, Christopher (Lewisham West)


Clark, Dr David (South Shields)
Horam, John
Race, Reg


Cocks, Rt Hon Michael (Bristol S)
Howell, Rt Hon Denis (B'ham, Sm H)
Radice, Giles


Conlon, Bernard
Huckfield, Les
Rees, Rt Hon Merlyn (Leeds South)


Cook, Robin F.
Hughes, Mark (Durham)
Richardson, Jo


Cox, Tom (Wandsworth, Tooting)
Hughes, Robert (Aberdeen North)
Roberts, Albert (Normanton)


Craigen, J. M. (Glasgow, Maryhill)
Janner, Hon Greville
Roberts, Allan (Bootle)


Crowther, J. S.
Jay, Rt Hon Douglas
Roberts, Ernest (Hackney North)


Cryer, Bob
John, Brynmor
Roberts, Gwilym (Cannock)


Cunliffe, Lawrence
Johnson, James (Hull West)
Robinson, Geoffrey (Coventry NW)


Cunningham, Dr John (Whitehaven)
Johnson, Walter (Derby South)
Robinson, Peter (Belfast East)


Davidson, Arthur
Johnston, Russell (Inverness)
Rodgers, Rt Hon William


Davies, Rt Hon Denzil (Lianelll)
Jones, Rt Hon Alec (Rhondda)
Rooker, J. W.


Davies, Ifor (Gower)
Jones, Barry (East Flint)
Roper, John


Davis, Clinton, (Hackney Central)
Jones, Dan (Burnley)
Ross, Ernest (Dundee West)


Davis, Terry (B'rm'ham, Stechford)
Kaufman, Rt Hon Gerald
Ross, Stephen (Isle of Wight)


Deakins, Eric
Kilfedder, James A.
Rowlands, Ted


Dempsey, James
Kinnock, Neil
Ryman, John


Dewar, Donald
Lambie, David
Sandelson, Neville


Dixon, Donald
Lamborn, Harry
Sever, John


Dobson, Frank
Leadbitter, Ted
Sheerman, Barry


Dormand, Jack
Leighton, Ronald
Sheldon, Rt Hon Robert (A'ton-u-L)


Douglas, Dick
Lestor, Miss Joan (Eton & Slough)
Shore, Rt Hon Peter (Step and Pop)


Douglas-Mann, Bruce
Lewis, Ron (Carlisle)
Silkin, Rt Hon John (Deptford)


Dubs, Alfred
Litherland, Robert
Silkin, Rt Hon S.C. (Dulwich)


Duffy, A. E. P.
Lofthouse, Geoffrey
Silverman, Julius


Dunn, James A. (Liverpool, Kirkdale)
Lyons, Edward (Bradford West)
Skinner, Dennis


Dunnett, Jack
Mabon, Rt Hon Dr. J. Dickson
Smith, Rt Hon J. (North Lanarkshire)


Dunwoody, Hon Mrs Gwyneth
McDonald, Dr Oonagh
Snape, Peter


Eadie, Alex
McElhone, Frank
Soley, Clive


Eastham, Ken
McGuire, Michael (Ince)
Spearing, Nigel


Edwards, Robert (Wolv SE)
McKay, Allen (Penistone)
Spriggs, Leslie


Ellis, Raymond (NE Derbyshire)
McKelvey, William
Stallard, A. W.


Ellis, Tom (Wrexham)
MacKenzie, Rt Hon Gregor
Steel, Rt Hon David


English, Michael
Maclennan, Robert
Stewart, Rt Hon Donald (W Isles)


Ennals, Rt Hon David
McNamara, Kevin
Stoddart, David


Evans, Ioan (Aberdare)
McTaggart, Robert
Stott, Roger


Evans, John (Newton)
Magee, Bryan
Strang, Gavin


Ewing, Harry
Marks, Kenneth
Straw, Jack


Faulds, Andrew
Marshall, David (Gl'sgow, Shettles'n)
Summerskill, Hon Dr Shirley




NOES


Adley, Robert
Douglas-Hamilton, Lord James
Howell, Ralph (North Norfolk)


Aitken, Jonathan
Dover, Denshore
Hunt, David (Wirral)


Alexander, Richard
du Cann, Rt Hon Edward
Hunt, John (Ravensbourne)


Alison, Michael
Dunn, Robert (Dartford)
Irving, Charles (Cheltenham)


Amery, Rt Hon Julian
Durant, Tony
Jenkin, Rt Hon Patrick


Ancram, Michael
Dykes, Hugh
Jessel, Toby


Arnold, Tom
Eden, Rt Hon Sir John
Johnson Smith, Geoffrey


Aspinwall, Jack
Edwards, Rt Hon N. (Pembroke)
Jopling, Rt Hon Michael


Atkins, Rt Hon H. (Spelthorne)
Eggar, Tim
Joseph, Rt Hon Sir Keith


Atkins, Robert (Preston North)
Elliott, Sir William
Kellett-Bowman, Mrs Elaine


Atkinson, David (B'mouth, East)
Eyre, Reginald
Kershaw, Anthony


Baker, Kenneth (St. Marylebone)
Fairbairn, Nicholas
Kimball, Marcus


Baker, Nicholas (North Dorset)
Fairgrieve, Russell
King, Rt Hon Tom


Beaumont-Dark, Anthony
Faith, Mrs Sheila
Kitson, Sir Timothy


Bell, Sir Ronald
Farr, John
Knight, Mrs Jill


Bendall, Vivian
Fell, Anthony
Knox, David


Bennett, Sir Frederic (Torbay)
Fenner, Mrs Peggy
Lamont, Norman


Benyon, Thomas (Abingdon)
Finsberg, Geoffrey
Lang, Ian


Benyon, W. (Buckingham)
Fisher, Sir Nigel
Langford-Holt, Sir John


Best, Keith
Fletcher, Alexander (Edinburgh N)
Latham, Michael


Bevan, David Gilroy
Fletcher-Cooke, Charles
Lawrence, Ivan


Bitten, Rt Hon John
Fookes, Miss Janet
Lawson, Nigel


Biggs-Davison, John
Forman, Nigel
Lee, John


Blackburn, John
Fowler, Rt Hon Norman
Lennox-Boyd, Hon Mark


Blaker, Peter
Fox, Marcus
Lester, Jim (Beeston)


Body, Richard
Fraser, Rt Hon Sir Hugh
Lloyd, Ian (Havant & Waterloo)


Bonsor, Sir Nicholas
Fraser, Peter (South Angus)
Lloyd, Peter (Fareham)


Boscawen, Hon Robert
Fry, Peter
Loveridge, John


Bowden, Andrew
Galbraith, Hon T. G. D.
Luce, Richard


Boyson, Dr Rhodes
Gardiner, George (Reigate)
Lyell, Nicholas


Braine, Sir Bernard
Gardner, Edward (South Fylde)
Macfarlane, Neil


Bright, Graham
Garel-Jones, Tristan
MacKay, John (Argyll)


Brinton, Tim
Gilmour, Rt Hon Sir Ian
Macmillan, Rt Hon M. (Farnham)


Brittan, Leon
Glyn, Dr Alan
McNair-Wilson, Michael, (Newbury)


Brocklebank-Fowler, Christopher
Goodlad, Alastair
McNair-Wilson, Patrick (New Forest)


Brooke, Hon Peter
Gorst, John
McQuarrie, Albert


Brotherton, Michael
Gow, Ian
Madel, David


Brown, Michael (Brigg & Sc'thorpe)
Gower, Sir Raymond
Major, John


Browne, John (Winchester)
Grant, Anthony (Harrow C)
Marland, Paul


Bruce-Gardyne, John
Gray, Hamish
Marlow, Tony


Bryan, Sir Paul
Grieve, Percy
Marshall, Michael (Arundel)


Buchanan-Smith, Hon Alick
Griffiths, Eldon (Bury St Edmunds)
Marten, Neil (Banbury)


Buck, Antony
Griffiths, Peter (Portsmouh N)
Mates, Michael


Budgen, Nick
Grist, Ian
Mather, Carol


Bulmer, Esmond
Grylls, Michael
Maude, Rt Hon Angus


Burden, Sir Frederick
Gummer, John Selwyn
Mawby, Ray


Butcher, John
Hamilton, Hon Archie (Eps'm & Ew'll)
Mawhinney, Dr Brian


Butler, Hon Adam
Hamilton, Michael (Salisbury)
Maxwell-Hyslop, Robin


Cadbury, Jocelyn
Hampson, Dr Keith
Mayhew, Patrick


Carlisle, John (Luton West)
Hannam, John
Meyer, Sir Anthony


Carlisle Kenneth (Lincoln)
Haselhurst, Alan
Miller, Hal (Bromsgrove & Redditch)


Carlisle, Rt Hon Mark (Runcorn)
Hastings, Stephen
Mills, Iain (Meriden)


Chalker, Mrs. Lynda
Havers, Rt Hon Sir Michael
Mills, Peter (West Devon)


Channon, Rt Hon Paul
Hawkins, Paul
Miscampbell, Norman


Chapman, Sydney
Hawksley, Warren
Mitchell, David (Basingstoke)


Churchill, W. S.
Hayhoe, Barney
Moate, Roger


Clark, Hon Alan (Plymouth, Sutton)
Heath, Rt Hon Edward
Monro, Hector


Clarke, Kenneth (Rushcliffe)
Heddle, John
Montgomery, Fergus


Clegg, Sir Walter
Henderson, Barry
Moore, John


Colvin, Michael
Heseltine, Rt Hon Michael
Morgan, Geraint


Cope, John
Hicks, Robert
Morris, Michael (Northampton, Sth)


Cormack, Patrick
Higgins, Rt Hon Terence L.
Morrison, Hon Charles (Devizes)


Corrie, John
Hill, James
Morrison, Hon Peter (City of Chester)


Costain, Sir Albert
Hogg, Hon Douglas (Grantham)
Murphy, Christopher


Critchley, Julian
Holland, Philip (Carlton)
Myles, David


Crouch, David
Hooson, Tom
Neale, Gerrard


Dean, Paul (North Somerset)
Hordern, Peter
Needham, Richard


Dickens, Geoffrey
Howe, Rt Hon Sir Geoffrey
Nelson, Anthony


Dorrell, Stephen
Howell, Rt Hon David (Guildford)
Neubert, Michael

Normanton, Tom
Rost, Peter
Thompson, Donald


Nott, Rt Hon John
Royle, Sir Anthony
Thorne, Neil (Ilford South)


Onslow, Cranley
Sainsbury, Hon Timothy
Thornton, Malcolm


Oppenheim, Rt Hon Sally
St. John-Stevas, Rt Hon Norman
Townend, John (Bridlington)


Page, John (Harrow, West)
Scott, Nicholas
Townsend, Cyril D. (Bexleyheath)


Page, Rt Hon Sir Graham (Crosby)
Shaw, Michael (Scarborough)
Trippler, David


Page, Richard (SW Hertfordshire)
Shelton, William (Streatham)
van Straubenzee, W. R.


Parris, Matthew
Shepherd, Colin (Hereford)
Vaughan, Dr Gerard


Patten, Christopher (Bath)
Shepherd, Richard (Aldridge-Br'hills)
Waddington, David


Patten, John (Oxford)
Shersby, Michael
Wakeham, John


Pattie, Geoffrey
Silvesler, Fred
Waldegrave, Hon William


Pawsey, James
Sims, Roger
Walker, Bill (Perth & E Perthshire)


Percival, Sir Ian
Skeet, T. H. H.
Walker-Smith, Rt Hon Sir Derek


Peyton, Rt Hon John
Speed, Keith
Wall, Patrick


Pink, R. Bonner
Speller, Tony
Walters, Dennis


Pollock, Alexander
Spence, John
W[...]d, John


Porter, Barry
Spicer, Jim (West Dorset)
Warren, Kenneth


Prentice, Rt Hon Reg
Spicer, Michael (S Worcestershire)
Watson, John


Price, Sir David (Eastleigh)
Sproat, Iain
Wells, John (Maidstone)


Prior, Rt Hon James
Squire, Robin
Wells, Bowen (Hert'rd & Stev'nage)



Proctor, K Harvey
Stainton, Keith


Pym, Rt Hon Francis
Stanbrook, Ivor
Wheeler, John


Raison, Timothy
Stanley, John
Whitelaw, Rt Hon William


Rathbone, Tim
Steen, Anthony
Whitney, Raymond


Rees, Peter (Dover and Deal)
Stevens, Martin
Wickenden, Keith


Rees-Davies, W. R.
Stewart, Ian (Hitchin)
Wiggin, Jerry


Renton, Tim
Stewart, John (East Renfrewshire)
Wilkinson, John


Rhodes James, Robert
Stokes, John
Williams, Delwyn (Montgomery)


Rhys Williams, Sir Brandon
Stradling Thomas, J.
Winterton, Nicholas


Ridley, Hon Nicholas
Tapsell, Peter
Wolfson, Mark


Rifkind, Malcolm
Taylor, Robert (Croydon NW)
Young, Sir George (Acton)


Rippon, Rt Hon Geoffrey
Taylor, Teddy (Southend East)
Younger, Rt Hon George


Roberts, Michael (Cardiff NW)
Tebbit, Norman
TELLERS FOR THE NOES


Roberts, Wyn (Conway)
Thatcher, Rt Hon Mrs Margaret
Mr. Spencer Le Marchant and


Rossl, Hugh
Thomas, Rt Hon Peter (Hendon S)
Mr. Anthony Berry.

Question accordingly negatived.

INDEPENDENT SCHOOLS (ASSISTED PLACES)

The Secretary of State for Education and Science (Mr. Mark Carlisle): I beg to move,
That the draft Education (Assisted Places) Regulations 1980, which were laid before this House on 21st July, be approved.
These regulations provide the administrative framework of the assisted places scheme that was provided for in section 17(6) of the Education Act 1980. This is not the time to debate the principle of that scheme, which was debated at length during the passage of that Act. All I will say now about the principle of the scheme is that it is not for the benefit of the schools or the teachers, or even the parents. It is, first and foremost, a scheme for the benefit of the children, and our aim in establishing it is to extend the education opportunities open to children who could benefit from the academic atmosphere of some of those schools—particularly the independent day grammar schools—but whose parents cannot afford to pay the fees.
This is the opportunity for the House to have the debate that we promised at Bill to examine in detail the regulations the time of the passage of the Education that I and my right hon. Friend the Secretary of State for Wales propose to use for the purpose of the assisted places scheme.
Planning for the scheme, which is, of course, provisional and subject to the approval by both Houses of these draft regulations, is well advanced and progressing satisfactorily. Out of the 470 schools in England that originally indicated an interest in the scheme, we have now invited 218 to join this scheme from 1981 and to sign, subject to the passing of the regulations, the necessary participation agreements. These schools will be offering, in total, about 5,500 assisted places each year, of which about 900 will be for direct entry at sixth form level.
The detailed figures are still subject to final agreement with the schools concerned, but of those 5,500 we expect 2,400 places to be in boys' schools, 2,150 in girls' schools and 950 in mixed schools.
Therefore, the balance between boys' schools and girls' schools and places for boys and girls within the scheme reflects the balance between boys' schools and girls' schools in the independent sector as a whole. The geographical distribution of the schools and the places shows a balance in favour of the North-West. Avon and the South-East. To some extent this reflects the pattern of the old direct grant schools system, and almost two-thirds of the assisted places will be provided in former direct grant schools. Also, 117 out of the 121 direct grant schools that went independent after the removal of the direct grant system by the previous Government have applied and have been invited to join the scheme. The balance between the various areas reflects the distribution of independent schools throughout the country.
The House will remember from the discussions on the Education Bill 1980 that the assisted places scheme will operate through two main instruments. First, every school will have its own participation agreement with the Secretary of State, which will set out the detailed arrangements as to numbers of places and other matters that are applicable to that school's participation in the scheme. Secondly, there will be a body of regulations under section 17 which, except where the regulations provide for exceptions, will apply to all schools in the scheme.
Section 17 of the Act sets out clearly the matters that the regulations are to cover. Briefly, there are four areas. They deal with the conditions of eligibility for selection for an assisted place; the arrangements for the remission of fees and the reimbursement of schools for the fees that they remit; the conditions relating to the selection and admission of pupils to the schools, the charging of fees, the keeping of accounts and the providing of necessary information; and any other matters that the Secretary of State considers appropriate.
In accordance with section 17 of the Act I have consulted, as I am required to do, the representatives of the schools involved before putting forward these regulations for approval by the House. As this is a short debate, I want briefly to describe some of the main provisions in the regulations, although if hon. Members on either side of the House wish to


raise any detailed queries, if I catch your eye, Mr. Speaker, and am allowed, with the consent of the House, to do so, I shall attempt to deal with such detailed questions at the end of the debate.
Part I of the regulations deals largely with matters of definition and interpretation. Part II deals with matters of eligibility and selection for the scheme.
Regulation 5, which is important, provides that to be selected for an assisted place a child must either have reached the age of 11 or be of such an age that he will reach it within his first year at the school. In addition, it provides that a child may be admitted to an assisted place only at a normal age of entry to the school. Where exceptions to this rule are permitted—such as the cases of those who may have moved home to another part of the country—pupils will be eligible for assisted places only if they are of such an age that they could have been admitted to an assisted place at a normal age of entry after the school joined the scheme. In other words, the scheme is aimed at meeting those joining the schools after September next year and does not provide for those who are already pupils at those schools.
Regulation 6 lays down the further conditions that apply to the selection of pupils for assisted places at sixth-form level. Here we have provided that any transfer into the sixth form of an independent school from a State school at the age of 16 will normally take place only with the consent of the local education authority. We have done that to meet the fear expressed by some of those involved that the scheme otherwise might denude some schools at sixth-form level.
Independent schools can contribute much to minority subjects, which cannot always be offered in the sixth form of maintained schools. That is one of the potentially fruitful areas for co-operation between the maintained and independent sector, and is particularly true at a time when falling numbers at schools of all kinds are bound to affect the viability of individual sixth forms. I hope that authorities will use wisely the discretion and additional opportunities that they are given for co-operation through the assisted places scheme. It is at no cost to themselves.
It is axiomatic of any scheme that leaves the right to the local education authority to say "Yes" that it is bound equally to offer the right to say "No". Clearly, local education authorities will consider applications for a child to move to independent schools at 16 on the basis of what is best for that child and the opportunities that exist in the maintained and independent sector in the area.

Mr. David Crouch: I am disturbed to hear what my right hon. and learned Friend says. By implication, he appears to be saying that in the maintained sector, in grammar schools for children aged 16, it is not possible to provide the quality of education that he is hoping will be found in the private sector. Am I wrong?

Mr. Carlisle: With great respect, my hon. Friend is utterly wrong. The opportunity to move to a sixth form at 16, from one sector to another, is important. With falling numbers, individual schools in an area may not be able to be viable in all subjects. One purpose of providing for the movement but making it subject to the local education authority's approval is to meet the complaint that there may be a movement out that could make certain sixth forms not viable. Authorities will be able to consider individual cases on their merits. I hope that local education authorities will always take into account whether there is availability in the maintained schools for a mixture of A-level subjects that the child wants to take but not deny the opportunity to move on an assisted place to an independent school if that school is able to provide the mix of subjects that the comprehensive school cannot.

Mr. Neil Kinnock: Does the Minister envisage a part-time movement in and out of the private sector at sixth-form level in order to study particular subjects? Secondly, what will he do to those local education authorities that will not permit pupils from maintained schools to move into the private sector? Thirdly, how will he enforce any penalties that he envisages? If he can quickly answer those questions it will save time later.

Mr. Carlisle: I am glad that the hon. Gentleman says that it will save time later. We are limited to an hour and a


half. It does not matter at what stage the time is taken up.
The hon. Gentleman asked whether I envisaged people moving part-time from one school to another. That has nothing to do with the independent sector scheme. I have advanced the view in various speeches that there should be greater cooperation at sixth-form level between the independent and maintained sector to ensure adequate coverage of all subjects to the advantage of all children.
I said that it was axiomatic that in giving local education authorities discretion they had the power to say "No", but if certain authorities decide, as a matter of policy, to say "No" in any event, irrespective of the availability in the maintained sector of a course that a child wants to follow and when the course is available in an independent school in the area, I might have to consider amendments in that light.

Mr. Kinnock: What does that mean?

Mr. Carlisle: It means what I said. I have taken no reserve powers, but if local education authorities choose, irrespective of the educational merit of individual children, to take a blanket decision to refuse to allow children to move, even though the authorities are unable to provide opportunities in the subjects that the children wish to study but which are available through an assisted place at an independent school in the area, I may have to consider taking reserve powers.
Regulation 7 provides that a pupil shall not be eligible for an assisted place unless he will qualify for fees remission on the fee remission scale in the first assisted year. All pupils who hold assisted places will, therefore, be from families who qualify for assistance under the fee remission scale. However, regulation 5 provides that when the financial situation of parents with a child at a school changes substantially for the worse after the child has been entered for the school they will be eligible for assistance at that stage, though that is subject to the child's being of the age that he or she could have entered the scheme at 11.

Mr. Christopher Price: On this point, there has been considerable disquiet about the powers of scrutiny of the administrative staff of each school, which sometimes consists of a single untrained clerk, particularly

when it is known that even the Inland Revenue gets it wrong £20 million either way and cannot properly investigate the Vesteys, and so on. What statutory powers will administrative staffs have if they are unhappy about the declaration of income made by parents?

Mr. Carlisle: What I like about the hon. Member for Lewisham, West (Mr. Price) is that he rises saying "On this point" and asks a question on another point. which I have not yet reached in my speech. The running of the scheme is left, basically, to the integrity of the schools involved. There is a final power, if the scheme is being abused, to remove the school from the scheme or, if the abuse is the provision of wilfully false information by parents, to withdraw an assisted place given to the child concerned or any other child of the family.
On the point raised by the hon. Member for Lewisham, West, regulation 8 lays the basic responsibility for selecting pupils on the schools. I very much hope that in assessing the needs and abilities of children who apply for assisted places those schools will have the co-operation of maintained schools in their area and of the staff of those schools. But I am sure that in the end the judgment about whether a child can benefit from the education offered at a particular school is best made, and can only be made, by that school after the fullest possible consultation with those who have been involved in the child's education.

Mr. A. J. Beith: Can the right hon. and learned Gentleman throw some light on the dilemma expressed by the headmaster who asked "If I have 90 children for 40 places, which do I admit—the 40 cleverest or the 40 poorest?"

Mr. Carlisle: That must be a matter for the school to decide.

Mr. Beith: Oh.

Mr. Carlisle: There is no other way. The direct-grant schools were well used to dealing with this problem in the past. It is a fair issue—one with which I tried to deal when I addressed the head teachers of the schools involved. It may face the schools at various times. They will have to pool their experience as to the best way of assessing the individual merits of the individual child and the


individual needs of the parents. Only they, by examination and by interview, are in a position to decide those who, in their view, would benefit most from the advantages of the scheme.

Mr. Martin Flannery: Does the Secretary of State visualise that the inspectorate will play any role in the examination of the school—a kind of 11-plus? In Committee we envisaged that another 1,000 inspectors would be necessary. That would be very costly. I said then that we should need a vast number of inspectors to look at individual cases, and I wondered how much that would cost.

Mr. Carlisle: The hon. Gentleman should remember that his own party removed the inspectorate's power to give a certificate of recognition of efficiency to independent schools. Clearly, any school in the scheme must be registered as an independent school. I assure the hon. Gentleman that we have had the advice of the inspectorate as to the appropriateness and the standard of the schools that have been accepted into the scheme. We have been very careful in scrutinising the high academic standards that we have set.
Part III deals with the arrangements for the remission of fees. I shall not deal with this at length because the basic proposals were brought to the attention of the House earlier in answers that I gave in June to my hon. Friend the Member for Liverpool, Garston (Mr. Thornton). However, there are one or two points that I should like to mention.
First, eligibility for fee remission in a particular school year is determined by reference to the relevant income in the preceding financial year. Secondly, relevant income, which really is gross income other than with child benefit, includes income of both parents, as defined in the schedule, together with any unearned income that may go to any of the dependent children.
Thirdly, where full information relating to income for the immediately preceding year is not readily available, the regulations allow a remission to be calculated on the basis of an estimate of income.
The income scales and the means test are designed to be generous to the less well-off, so that the families at the lower end of the scale receive free places or

make only modest contributions to fees, while once income starts to rise above the national average family income parents start having to contribute substantially at increasing levels.
For example, in practice families with a relevant income of £4,766 or less would have the whole of the school fee remitted. With an income of £5,500, they would be required to pay about £99 a year, and with £7,500 they would pay £480 a year. Then the scale increases more sharply, ending with those with an income of £11,000, who would have to pay fees in excess of £1,500 before receiving any assistance. The average fee of the schools involved is between £1,100 and £1,200 a year.
We have always made it clear that the scheme is not intended to help people who can afford independent school fees themselves, even if only by making some relatively slight additional sacrifice. We have to ensure that parents in the lower and middle income groups, who could not possibly afford independent school fees, receive sufficient assistance to make taking up a place a genuine possibility.
Although it is not directly relevant to these regulations, hon. Members may wish to know that I also intend, under another section of the Bill, to lay regulations to provide help with incidental expenses for assisted place holders. The help will come out of the resources made available for the scheme. The regulations will deal with the cost of school meals, uniforms and transport. They will ensure that pupils holding assisted places are in a similar position to children who attend maintained schools. Thus, able children from less well-off families will not be deterred through extra costs. I shall lay the regulations before the House in due course.
The other parts of the regulations deal with the administrative arrangements and miscellaneous requirements applicable to the scheme. Regulation 18 provides for the publication of information by schools about the scheme and about themselves. It provides that independent schools that participate shall, as we promised during the Bill's passage, be required to publish such information about themselves and their examination results as may be required for maintained schools.
Regulation 19 provides that not less than 60 per cent. of assisted place


holders shall be drawn from publicly maintained schools. Because the income scale is strict, we expect that a far higher proportion of assisted place holders will come from such schools. The 60 per cent. figure is above the earlier 50 per cent. proposal.
I have attempted to draw the attention of the House to some of the major features of the regulations. I am confident that they will provide the necessary framework for the operation of the scheme. I commend them. I underline the fact that the regulations are not to be confused with the scheme itself. They exist for the purpose of the scheme and will be kept under review to ensure that they meet those purposes. For its success, the scheme will depend upon the schools participating in it. It is a scheme of additional assistance and help for children. It is children's education that matters and it is that which the House debates tonight. It is that at which the regulations are aimed.

Mr. Neil Kinnock: The regulations start to put some flesh on the bones of section 17 of the Education Act 1980. It has been apparent since the first publication of the scheme in a draft document back in July 1979—and it is now categorically obvious—that whilst other aspects of education policy and Government policy generally, including unemployment, housing, social security and health cuts, are heartily opposed, this aspect of the Government's policy is widely despised. It is despised unanimously by the teachers' unions. It is despised by the National Union of Teachers, the National Association of Schoolmasters and Union of Women Teachers, the National Association of Head Teachers, the Secondary Heads Association, the Society of Education Officers and even by the Association of Professional Teachers so beloved to the heart of the hon. Member for Altrincham and Sale (Mr. Montgomery). Even the Assistant Masters and Mistresses Association, at its annual conference a short time ago, resolved that it would oppose the scheme. One of the vice-presidents, in one of the conference's most effective and important speeches, said that it was completely inappropriate while State education was being cut. He went on to say that it could be interpreted as a

vote of no confidence in State education. That is the finding of a teachers' union that has a legendary reputation for being non-partisan—even anti-partisan—and moderate and modest in all its representations.
When the Government are the subject of attacks from such people they should heed the opinion of the education world. They should heed their own Back Benchers who have had the, courage throughout the debates to stand up for the maintained system and to say, as the AMMA did, that this scheme is nothing other than a declaration by the man who is responsible for the education of 95 per cent. of the children of this country—the children in the maintained system—that that system is second-rate. If that were not so, the right hon. and learned Gentleman could not conceivably have sought to introduce the scheme on the basis that we now see.
Tory councillors have attacked the scheme for the way in which it will deprive their local schools, of which they are justifiably proud, of resources and talent, for the way in which it will divide our education system even further. Even the schools have indicated to the Government precisely what they think of the scheme. At the beginning of this year the Government circulated 1,100 schools in the private sector. The Government call them independent schools. I choose to call them schools that sell education as a business. That is a more precise definition of schools that live in a supportive environment, that already receive substantial sums of public money, and that will receive even more now through the assisted places scheme. Independent they hardly are. I call them private schools, and of the 1,100 that were circulated by the Government 470 indicated an interest over an extended period, with an extended deadline. Of those, 218 were deemed to be fit to participate. That in itself says a great deal about the kind of scheme that it is and the attitude that a substantial part of the private sector has towards the jeopardy into which the scheme puts it by the divisiveness that is implicit in its nature.
At the outset of our debates on the scheme we accused the Government of introducing an arrangement that would rob the public purse in order to support the already affluent. We accused the


Government then of encouraging the poaching of talent from the maintained system so that the tinpot educationalists who support the Tory Party could substantiate their claim of the superiority of the private sector and the inferiority and inadequacy of the maintained sector. They will be able to do that because the brightest children will be recruited to the private sector and will strengthen its academic results. There is nothing in what the Minister said tonight, in the shower of press releases issued by the Under-Secretary—especially in the past three or four weeks—to soften the market, or in the statutory instrument to refute any of the charges that we, the teachers' unions, parents and members of local education authorities have made. The right hon. and learned Gentleman knows that to be an accurate statement.
What of that robbery of the public purse? We now discover, as a consequence of a statement published on 6 October, that the financial assistance for the scheme provided for in the statutory instrument will be available for day or tuition fees on a sliding scale. The statement says:
Under the scheme no assistance will be available for boarding fees. If parents wish their child to be a boarder some schools which offer assisted places may themselves be willing to offer help with boarding fees.
Could it be the case that parents are able to take advantage of the assisted places scheme as a means to subsidise expenditure that they would have to find to meet boarding fees? If that is not the case, why talk of day or tuition fees? Why not make it explicit that there is no possibility of any of the subscriptions being used either to gain access to boarding schools so that parents can be assisted from the funds of the schools themselves, or that parents can find the boarding fees with the help of the State, even to a modest extent, with the assisted places scheme.
On the question of helping the bright children of poor families, the Secretary of State mentioned the supplementary instrument that he will lay before us. He went into some detail both today and on 18 October as to what that would mean. I do not wish to make extensive reference to that, because I look forward to a further debate. The right hon. and learned Gentleman speaks of school

transport subsidies being made available in direct contrast to everything that he protested before his defeat in March concerning the maintained system. He speaks of school uniform allowances, but he should remember that because of his cuts special allowances for school uniform are being obliterated in LEAs throughout Britain. Most grotesque of all, he talks about the possibility of free and half-price schools meals for assisted places children. I must remind him that because of the consequences of the changes in section 22 of the 1980 Act a widow with a total income of £44 a week, including child benefit for two children, is disqualified from family income supplement and supplementary benefit and is not able to claim free school meals. If that widow has any foresight she will ensure that she spawns academic geniuses, who can go to assisted places schools and receive free school meals——

Mr. Mark Carlisle: Mr. Mark Carlisle: No.

Mr. Kinnock: The right hon. and learned Gentleman does not understand his own regulations. A widow on £44 a week with a child on an assisted places scheme would qualify. The scheme provides for a basic threshold of £91 per week—£4,600 a year. I thought that the Secretary of State was proud of that.

Mr. Carlisle: The hon. Gentleman should not make bad points. The provision in assisted places schools for free meals, from which the hon. Gentleman quickly moved to make another point, is identical to that in the maintained scheme. Free school meals are limited to those either on family income supplement or supplementary benefit.

Mr. Kinnock: I am glad that the right hon. and learned Gentleman took up that point. I wonder whether the free school meals in an assisted places school in Dorset or elsewhere will be a segregated cold package, so that the child can be easily identified, or has the right hon. and learned Gentleman discarded all his fine libertarian feelings about the stigmatisation of children in receipt of free meals?

Mr. Jonathan Aitken: Nonsense.

Mr. Kinnock: What the hon. Member for Thanet, East (Mr. Aitken) knows about the maintained school system could be written on the back of a postage


stamp with a paint spray. The assisted places scheme was not conceived as, and will not be implemented as, a means to assist the bright children of poor homes. It will help those already seeking private school places. It will assist them at the margin.
If that were not the case, and if the right hon. and learned Gentleman were really seeking the recruitment of poor children to these schemes in schools which, by his own admission, charge an average day fee of £1,100 to £1,200 a year, he would be looking for a budget this year not of £3 million but of more than £6 million—possibly even as high as £7 million. Therefore, on the basis of the money that he has set aside out of the rest of the education budget—because he was talking absolute nonsense when he gave the impression last year that he had found a new hitherto undiscovered bucket of finance for the purpose of the assisted places scheme—he knows very well that it will not help poor children. In order to do so, he would either have to provide for half the number of kids or find twice as much money as he has been able to get. He knows very well that there is no prospect of those poor, full remission children being assisted under this scheme.
What we have instead is the pirating of scholastic talent from the maintained sector. Indeed, the Minister's own document, in keeping with the publication of this instrument, demonstrates that more conclusively than any of the other charges and challenges ever could. We need only look at the geographical scatter of the schools to be included in the scheme—Newcastle-upon-Tyne, five schools; Liverpool, six schools; just over the Mersey, in the Wirral, three schools; in Chester—one town—two schools; in Wakefield, two schools; in Worcester, two schools; in Cambridge, four schools; in Bristol, which is a kind of epicentre of this fallout, nine schools; and in neighbouring Bath, four schools. There will be four schools in Bedford, eight schools in South-East London, and four schools in North-West London.
Therefore, the challenge that we made in Committee which the Under-Secretary totally, failed to rebut was that the location of the assisted place schools would mean that in particular areas the academic groupings and pupils in the maintained

sector—which is so valuable, if only to offset Tory propaganda and demonstrate the academic success of the maintained sector—would be robbed simply because of the concentration of the kind of schools that could expect to be included in the assisted places scheme. That is coming to pass.
The right hon. and learned Gentleman will have to make a great apology to the education system in this country for reducing the effectivenes of the sixth forms in those areas. In answer to a question posed by one of my hon. Friends, he said that the viability of sixth forms was threatened by falling school rolls, and that one of the motivations of the assisted places scheme was to help out by cooperation at 16-plus. What a peculiar way to help out! Here we have the problem of falling school rolls, a reduction in the number of sixth forms and a threat to the viability to the sixth forms. With the roaring flames of falling rolls leaping up, does the right hon. and learned Gentleman come along with water, extra resources, teacher retraining, new equipment, or new resources for that school, the adoption of the federation system, or with encouragement for tertiary colleges? No, he comes along with a system that pirates that very talent from those sixth forms and transfers it into the private sector. That is the opposite of what he should be doing. Instead of pouring on that water of relief he is trying to put out the fire with more petrol.

Mr. Martin Stevens: Amid the pyrotechnics with which the hon. Gentleman is favouring us, is he not aware that for every child on an assisted place in a sixth form there are at present dozens from what we call the independent schools moving into the sixth forms in the maintained system, which is producing the kind of cross-fertilisation that many of us desire?

Mr. Kinnock: We have moved from pyrotechnics to cross-fertilisation. I wish that the debate was six hours long. It would become even more interesting. I thought that instead of saying pyrotechnics the hon. Gentleman said polytechnics. I expected the Under-Secretary to fall off his chair at the mere mention of those revolutionary institutions.
The hon. Member for Fulham (Mr. Stevens) has not grasped the point. I hope


that that is my fault, because 1 can put him right, but it may be the fault of the Secretary of State, because he does not understand the consequences either.
The Under-Secretary of State mentioned The Guardian. I refer him to an interesting letter in The Guardian yesterday concerning the assisted places scheme. A lady from Grundisburgh, Suffolk, wrote about the effect of the scheme on the sixth form. She said:
These developments at Farlingaye resulted largely from a close fought campaign by local parents in 1978, insisting that the education committee establish sixth form provision. Previously A-level students had to transfer from Farlingaye to Woodbridge school and no provision was made for other sixth-form programmes. The sixth form opened in September 1980 with 52 students, of whom 23 are doing A-levels. It is evident that if the 25 brightest are lost, then the academic curriculum of the sixth form is lost and, with it, the growing academic status of the school and the widened educational experience offered to all the youngsters in the area.
That is an important point, because that will be the effect of the concentrated impact of the assisted places scheme. The transfer backwards is extraordinary. People talk about the virility and independence of the private school system. They talk to me about the way in which I am threatening liberty by advocating the abolition of the private school system. But nothing is said about the two-thirds of the children entering private secondary schools who attended maintained primary schools and who, if no provision is made for the sixth form in the private system, will have to transfer back to the maintained system—into tertiary colleges, sixth-form colleges or the sixth form or comprehensive schools. The hon. Member for Fulham does not understand the problem. I recommend that he reads that letter in The Guardian.
I turn specifically to the extension of choice, about which the Under-Secretary of State spoke last week. If the assisted places scheme works in the way in which the Secretary of State wishes it to work—to secure the transfer of children from the maintained system to the private school system—that is not an extension of choice; it is a reduction of choice for the overwhelming majority of people who send their children to maintained schools. If the viability of sixth forms or of academic curricula is threatened by the absence of children, by the transfer of those priceless assets of talent that are

implicit in this scheme, that is a reduction of choice, in the same way that the other form of selection—the 11-plus examination—was a reduction of choice for the overwhelming majority of people.
Regulation 8 presumes that "bought is best". The proposition is that the child will be capable of benefiting from the education provided at that school. That is still a "bought is best" presumption. Anyone who sustains that argument is declaring a lack of confidence in the maintained system.
One of the propositions put forward when we first heard of the assisted places scheme back in July 1979 was that it should not result in the distortion of the curriculum—those are not my words but the words of, I believe, Mr. Stewart Sexton, or whoever it was in the Department of Education and Science who wrote it all—of the remainder of the school system, especially the primary schools. But what can happen other than the distortion of that curriculum if primary schools are required specifically to prepare children at 11 or 13 years of age for entry into these schools whose nature is defined in regulation 8 of this instrument? Of course it will distort the curriculum. It will do so in the preparing school and the priming school, and it will do so in the maintained sector by the removal of a substantial chunk of the academically gifted children.
It is not much wonder that the National Association of Head Teachers writes to me to request that I ask the right hon. and learned Gentleman a few questions on this point. The association's letter says:
Draft regulation 8 makes it clear that it is up to the participating school to select the child, subject to only a very generalised proviso that they must be satisfied that he is capable of benefiting from the education provided at the school. This seems to us to contain a totally inadequate safeguard and to justify much tighter criteria within the regulations themselves.
I wonder whether we can see those. The letter continues by saying that the draft of these further regulations is not yet in existence, and that
It seems to me absolutely essential that the participating schools in the assisted places scheme should be compelled to publish, at the very minimum, the information which will be required of all maintained schools under section 8 of the Education Act 1980.
The fact is that it is not provided for


in the Act or in these regulations. Let us hope that it is provided in some other way that the same kind of information in the same circumstances is required of the assisted places scheme schools as of every other school.
Regulation 3 is a most extraordinary provision, especially for a scheme that is supposed to help the children of poor homes. Subsection (2) permits one to book places in the assisted places scheme. It is like putting a name down for Eton. A child does not have to have sat the examination. A school does not have to ascertain whether a child is capable of benefiting. One just gets on with the application.
Of course, there will be advantages to parents who go about matters in that fashion. That is an open end of the scheme—regulation 19. One has to provide 60 per cent. of the places. This scheme must cover that. That means that a minuscule proportion of pupils will come from poor homes. A major proportion might be receiving very small amounts under this scheme, and that would still shove that school into the system because it would still have 60 per cent. of the pupils not on any specified level of support and who, in one form or another, to a greater or lesser degree. were in receipt of a couple of bob under the scheme.
The strange coincidence is that 67 per cent. of the children in the private secondary sector come from the maintained primary sector. That is almost exactly the same percentage as we are talking about in this scheme.

Mr. Beith: Further to the point that the hon. Gentleman is making, perhaps I may ask whether he realises that the Government's present assumption is that a much smaller proportion of poor children than originally thought will take part in the scheme because the amount of assistance has been increased. The Government's clear and stated conclusion, given in answer to questions, is that the number of places will not be reduced by the proportion that the amount of assistance is increased. Therefore, it must mean that taking part will be children of richer parents, taking smaller amounts from the scheme.

Mr. Kinnock: The hon. Gentleman is absolutely correct. Brevity is not only the soul of wit but clearly the soul of Liberalism. The hon. Member has just saved me the need to make my next point. [Interruption.] I realise that the hon. Member for Watford (Mr. Garel-Jones) does not like it. I shall cross the Chamber and grip his knee if it will cause him even more pleasure.
Regulation 6 concerns sixth forms. I have covered that point to some extent, but the right hon. and learned Gentleman did not adequately do so. What he has to tell us is what he will be doing with these reserve powers. It is not good enough for him to present these draft regulations, ask the House to support them and turn them into the law of the land, and say "I have not yet really made up my mind what I shall be doing to local education authorities that will not let their kids slip away from the maintained system and go into the private system."
Will the right hon. and learned Gentleman do a Heseltine? Will he have reserve powers? Will he have the power to reduce the rate support grant or to impose some other form of penalty? He owes it to the House and to the local councils to spell it out.

Mr. Mark Carlisle: I have already done so. I told the hon. Gentleman that I have taken no reserve powers. I shall see how the scheme works.

Mr. Kinnock: That is a great definition. "What are the reserve powers?"—"I have told the hon. Gentleman. I have not decided what the reserve powers are." That is terriffic. That is marvellous.

Mr. Carlisle: The hon. Gentleman allows his verbosity to carry him away on most occasions. I said quite clearly, and I say it again and specifically to the hon. Gentleman, that I have deliberately taken no reserve powers and that I do not intend to at this stage. I shall see what happens when the scheme develops.

Mr. Kinnock: The accusation of verbosity is preferable to the right hon. and learned Gentleman's vaguely threatening proposition. If our positions are reversed and I ever put to him something equally vague, he, with his nimble lawyer's brain and his searches for precise definitions,


will give me a terrible roasting. That will be my fate if I ever give him something so vague, threatening and meaningless.
Will the assisted places scheme replace the local authority provision of purchases in the private sector? If it does, will it be run on the same basis as the "treasure scheme," for instance, which means that only 3 per cent. of the beneficiaries have parents earnings less than £5,000 a year? Will it mean that in Barnet, for example, which is in the constituency of the right hon. Lady the Prime Minister, the public purse will have to provide, through the assisted places scheme, an anticipated £130,000 to send the children of the burghers of Barnet to the private sector when the burghers of Barnet are currently providing only £29,000 for that purpose? We need an answer, because Tory education authorities are gleefully anticipating that they will be able to save rate spending by replacing their pet schemes with the assisted places scheme.
The scheme is universally detested. It does not enjoy support even in the private sector. It has not received a vote of confidence. It has no support. The Under-Secretary of State is fond of preaching against social engineering. In this respect he is guilty, together with his right hon. and learned Friend, of the most malevolent social engineering and the resultant divisions in our school system. We shall get rid of the scheme. We shall terminate it in the first year in which the next Labour Government come to power. We shall take a leaf out of the Government's book and introduce a Bill of great brevity and force that will pass through the House at least as quickly as the rescue of grammar schools Bill of July 1979.
The right hon. and learned Gentleman can save himself some trouble. He can make his gesture tomorrow with the education cuts that he will have to swallow as a dry who is walking around in galoshes. He will save himself trouble if he attends Cabinet tomorrow and says "Here is my contribution of £3 million. It can come with the cancellation of the assisted places scheme." That might lose him a small amount of face, but it would give him some reputation as a man who is at least trying to save our education system.

Several Hon. Members: rose——

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I remind the House that the debate comes to an end at 11.45 p.m. Eight right hon. and hon. Members wish to participate in the debate, and I appeal for brevity.

Mr. Fergus Montgomery: I shall be brief, Mr. Deputy Speaker. The hon. Member for Bedwellty (Mr. Kinnock) made a meal out of this occasion. As you have rightly said, it is a short debate. The hon. Gentleman waxed loud and long, and with great passion. As he did so I began to fear that he might have been nominated as one of the contenders for the leadership of the Labour Party.
I shall deal with the area that I represent—Trafford, and the area of Greater Manchester. Trafford has kept its grammar schools. Boys and girls have traditionally been able to go to the grammar schools, and on to university and to higher academic careers.

Mr. Nigel Spearing: The hon. Gentleman knows that Trafford has one of the lowest proportions of pupils at grammar schools and one of the highest proportions of modern schools that cannot provide the full range of education.

Mr. Montgomery: The hon. Gentleman should do his homework before intervening. I do not wish to criticise comprehensive schools. No doubt there are very good comprehensive schools in the Greater Manchester area. No doubt there are parents who have children at those schools and who are perfectly satisfied with the education that they receive. It is fact, not fiction, that the particularly able and academic child is best catered for in a school that is designed for such children and where young lively minds meet minds of similar ability and aptitude, to the benefit of both.

Mr. Flannery: rose——

Mr. Montgomery: I shall not give way, as this is a very short debate. The hon. Member for Bedwellty made a great deal of this issue. One type of school, and one type only, can never meet the needs of all children. Under the old direct grant system, bright children could go to schools in my area, such as Manchester grammar


school or the direct grant schools to which the hon. Lady for Bolton, West (Mrs. Taylor) went. The previous Labour Government stopped that. They did not prevent children from wealthy homes from going to such schools. They could go because their parents could affort the fees. They prevented bright and able children, from families with little money, from going to them.
I am delighted that this Government have reopened the assisted places scheme, thus giving able children from less well-off homes—for whom the Labour Party apparently has no regard—the opportunity, which that party would deny them, of going to the top grammar schools in Britain.
I cannot understand the Labour Party's attitude. If we are to believe all we read, the Labour Party has always prided itself on being the party of compassion that cared for the less fortunate sections of the community. This piece of legislation is designed to help those who have little money but who have very bright children. On behalf of those children, I welcome the introduction of the assisted places scheme. This proposal was in the Conservative Party manifesto. We are implementing a party pledge, which was endorsed by a substantial majority in the general election of 1979.
I welcome the introduction of the assisted places scheme and the forthrightness and courage that my right hon. and learned Friend the Secretary of State has shown in pressing forward with the scheme despite the ill-informed criticism of some and the sheer mischievousness of others. In principle, the scheme has been agreed by the House. Tonight, we are dealing with the details of the regulations so that the scheme can be put into effect. I welcome the brevity of the regulations. My right hon. Friend has attempted to introduce sufficient regulations to ensure the proper use of public money, yet no more than are necessary to ensure a proper flexibility within the scheme, to the benefit of each child.
It has often been said that this scheme is a scheme not to help the independent schools but to help children. These schools do not need help, nor do they need to be bailed out. A tremendous number of people are anxious to get their children into them. The scheme is about

children, and the ability to help individual children. That is why I welcome it. One aspect of the regulations worries me. If the scheme is to help children, and if the sole criterion is to help those who could benefit from such education, but whose parents could not afford the full fees, it is wrong to let politics creep into it. Children can take up a place at such schools at the age of 11, or at any other age below that of 16. They need only have the agreement of the parent and the school. A child of 16, who has attended a State school until that age but who believes that his A-level requirements could be better met by his local independent school, can be prevented from taking up that place by the local education authority.
The local education authority can say "No, you cannot go to the independent school with help from the Government's assisted places scheme". The authority does not have to give any reasons for its decision. There is one specific example of this. Wakefield council has already passed a resolution saying that no child from its schools should be allowed to attend the sixth form of Wakefield grammar school or any other school within the assisted places scheme. This shows a total disregard for the needs of the children.
I question the legality of this proposal. Compulsory education in this country ceases at the age of 16, and sixth form work is not compulsory schooling. Therefore, I query the State's right to prevent a child from pursuing his studies at the age of 16 at the school of his choice. Having instituted a national scheme of financial assistance for such pupils, the State has no right to say that if a child has the misfortune to live under a Socialist council he or she cannot have that assistance. I ask the Secretary of State to look particularly at this part of his regulations, because it is nothing more than a sop to the National Union of Teachers. With that one proviso, I wholeheartedly welcome this scheme.

Mr. Ernest Armstrong: I find that even the discussion of this scheme at this stage in our educational development is offensive. In fact, it is more offensive than anything that I can remember in a lifetime spent in education.
In the Evening Standard tonight we are told that very severe cuts in education are on the way, on top of those that we have already had. The most important factor in our education system is the morale of the teaching profession. I have never known it to be lower than it is today. When the teachers see the cuts now being imposed and hear the Secretary of State saying that parents should contribute to the cost of books, and so on, they realise what is happening in the State system. for which the Secretary of State is directly responsible. At the same time, we are talking about regulations to enable some children to go into the independent sector. That is a severe blow to the morale of teachers who have a record of moderation and service to their pupils without any political concerns.
I want to put a particular case. I have lived in Durham all my life, grown up there, and served in the education system there. The Pilgrim Trust, sponsored by the then Archbishop of York—the late Archbishop Temple—instituted an inquiry into the effects of long-term unemployment. The trust studied six areas in the United Kingdom, one of them being Crook, in County Durham. Its members came to the place when I was growing up. The trust produced a remarkable report, in which it was pointed out that of the long-term unemployed—most of the people involved had been unemployed for more than five years—no less than 21 per cent. were of above-average intelligence, and another 50 per cent. were of good average intelligence. Some of those men were my contemporaries. At that time in Durham there were no fees for secondary education. Once one had negotiated the 11-plus there were no fees for the various courses available. Many unemployed men were unable to take up their places, although the education was free.
Under this scheme, with all the grants, and so on, and even if the schools are available, children of my constituents will not be able to take up places. For example, to single out one child from a one-parent family of three or four children would mean that, even if the fees were paid, because of the extra expense other children would have to be denied. That is what happened in the 1930s, and that is why people were so bitter.
I represent a constituency in Durham. There is no school in Durham on the list.
There are places in my constituency where the minimum travelling time to the nearest school is 2½ hours. The nearest boarding school on the list is between 75 and 80 miles from places in my constituency.
It is not a coincidence that we are discussing these regulations after a debate on unemployment. Hon. Members on both sides of the House recognise that our society has suffered because of the inequalities in, and the divisive nature of, our education service. The county of Durham prides itself on its public education; but if there is any virtue in the scheme, children in Durham will be denied the opportunity of taking advantage of it.

Mr. Montgomery: Newcastle.

Mr. Armstrong: The hon. Gentleman says "Newcastle", but from Wearhead to Newcastle, as he knows, is between 65 and 70 miles. There are no boarding schools in the area. The Royal grammar school, Newcastle, does not take boarders; pupils must travel each day. Therefore, children in my constituency are completely outside this scheme.
I could cite moral, social and educational grounds for opposition to this scheme but in this short debate I do not have the time. Our education service is one of the most divisive in the world, and this scheme perpetuates that divisiveness.
I agree with the hon. Member for Altrincham and Sale (Mr. Montgomery) that this is a manifesto commitment. The Secretary of State knows better than anybody that this is a manifesto commitment. I have noted how carefully the regulations have been drafted. The application of that manifesto commitment means that the injustices and inequalities will continue. I have given evidence of that from the county of Durham. At a time when the Secretary of State's full time concern and responsibility should be directed towards the State system, in which 95 per cent. of our children are educated, he is having to allocate time and resources to children who are already privileged. Many poor children, however clever they may be, will not be able to take advantage of this scheme. Therefore, I hope that my right


hon. and hon. Friends will join me in opposing the regulations.

Mr. Anthony Nelson: It was dispiriting to hear the comments of the right hon. Member for Durham, North-West (Mr. Armstrong) and the hon. Member for Bedwellty (Mr. Kinnock). Their dogmatic detestation of the scheme reflects their fundamental opposition to the independent sector rather than objections to the technicalities of the regulations. They both dwelt at length on the reflections that these regulations place on the maintained sector and suggested that the regulations imply that it is, by its nature, inferior. However, the choice is for parents. It is for them to decide whether to apply for the scheme so that their children may benefit. The scheme is designed for the benefit of pupils and not for the maintenance of cadres of teachers and the existing system.
I welcome the regulations. Against a difficult economic background the Government have kept faith with the electoral support that they have for this and other education measures. The scheme once again exemplifies the element of choice—and we should like to see a bigger element—that is being introduced.
This is not uncharted territory. We have had assisted places schemes in the past. One was known as the county award or State scholarship scheme. There are plenty of examples to show that the system works well and provides opportunities for young people that would not otherwise occur.
I shall give an example. There was a young boy who was not particularly bright and who had been to four or five schools before he was 10 years old. His parents were not wealthy, although they were not poor. There was little chance that he would have passed common entrance examination, and he certainly would not have passed the 11-plus. One day his father saw, outside the county council offices, a notice about assisted places. He thought that he would give his son a chance. The boy was accepted for Harrow. He had difficulties when he arrived, socially and academically. He did not know Latin. Term after term he went down in form after form. Eventually he pulled himself together. He ended up as head boy and won a scholarship to

Cambridge. Four years later he became an hon. Member of this House, representing Chichester.
I tell that story not out of vanity but to demonstrate that without that assisted places scheme I should not have had many of the opportunities and privileges that I did have. No hon. Member can expect me to bite the hand that fed me. I give a broad and generous welcome to the proposals. I hope that finance will allow them to be expanded in future. I wish them every success.

11.32 p.m.

Mr. A. J. Beith: The hon. Member for Chichester (Mr. Nelson) shares with the Secretary of State and his Ministers the capacity for walking around with his eyes shut and ears closed to the chorus of responsible opinion that is critical of the scheme.
I have no dogmatic objection to the private sector. I defend the right of people, if they choose, to send their children to private schools at their own expense. However, I share with people throughout the education system—and on the Conservative Benches—a detestation of a scheme that is deeply divisive and is an embarrassment to many people in the private sector. Conservative Members should listen to their hon. Friends and to Conservative councillors in areas like mine, who deeply resent the fact that the money that they would like to see applied to improve the State sector is being diverted to this scheme at a time of massive cuts. The Secretary of State should listen to his own hon. Friends or the chairman of the education committee in my county, who is as good a Conservative as he is. Many people deeply resent what the right hon. and learned Gentleman is trying to do under the scheme.
It is nonsense to pretend that the assistance under this scheme is to be carefully directed to the poor. The hon. Member for Altrincham and Sale (Mr. Montgomery) should remember that he is one of the poor under this scheme. His salary in this House entitles him to a measure of assistance if he has two children and wants to apply for an assisted place for one of them. Hon. Members may jocularly suggest that they are underpaid. If they believe that £11,000 is on the poverty line, they should come to my con-


stituency to see what people earn. The idea that giving assistance to people with incomes up to £11,000 a year is direct assistance to the poor is ludicrous. It is increasingly apparent from the Government's assumptions of where the take-up of the scheme will fall that much of this assistance will go to families who already intended to send their children to private schools and who will welcome modest assistance from the scheme.
It is outrageous that at a time when facilities for school uniform grants are threatened, when the Government wish to threaten school transport support, when the school meals service is being cut drastically—and, indeed, when eligibility for school meals has been cut so drastically—the beneficiaries of this scheme should get so much more favourable treatment than those attending State schools. It is outrageous that, whereas under the Government's intentions anybody over the family income supplement level will get no assistance with school meals, half-price school meals will be available from that level up to £4,000 a year under the assisted places scheme.
School transport over long distances, uniform grants, and all the other things That the Government are systematically taking away from the child attending a State school, will be given, on a scale hitherto unknown in the case of some of the assistance promised, to those attending private schools. The scheme is a further demonstration of what the Government are trying to do, which is to abandon the attempt to provide the best in the State sector, pick out a few people and give some kind of "Rolls-Royce" assistance and benefit to the private sector.
When one looks at the distribution of the schools in the scheme, one sees that that view is underlined. I am not saying that the Government can control where the best private schools are, but it is a fact that, for example, there is no school in the scheme either in my constituency or within 25 miles of it, but there are five in Newcastle upon Tyne.
When we discussed this in Committee the hon. Member for Brent, North (Dr. Boyson), who is the real enthusiast for the scheme—as you look along the Government Front Bench, Mr. Deputy Speaker, you see declining levels of enthusiasm for the scheme—said quite openly that it was

his ambition to try to ensure that where-ever in the country somebody lived he had access to the best academic teaching available to suit his need.
It is obvious that in areas that have no access to this scheme the Government have no intention of ensuring that the best children there can get the help that they need, unless at the same time the Government go to the education authorities of the areas not covered by the scheme and say "We recognise that we cannot provide assisted places for your area, but here is a bit extra to make sure that the sixth forms in your schools can provide that the assisted places scheme provides in other areas". I see no plans for that; no intention to ensure that in many parts of the country where these schools are not available sixth forms are strengthened and aided and that such deficiencies as the right hon. and learned Gentleman seems to be aware of are remedied.
The whole scheme is rightly resented in wide areas of the education system because it is seen as a vote of no confidence in the State system, and as an unwillingness on the part of the Government to put resources into the very parts of the State system where they could help those whom the Government think they want to help—children with no great financial backing but with the academic ability to benefit from the best that teaching can provide.
That can and should come from the State system. This scheme and these regulations, with all the anomalies that have emerged during the debate tonight, are a clear illustration that the Government do not want to provide it in that way, and when they announced further education cuts it will be done against the background of their determination to provide for the smallest imaginable number through the private sector. It is within the State sector that we ought to make this provision for a wide range of children, and the Government are not prepared to do that.

Mr. Tristan Garel-Jones: My right hon. and learned Friend is aware that there are hon. Members on the Government Benches who are not happy about the scheme. My hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) and others have


rightly said that this was a manifesto commitment, and indeed it was. I believe that it is something of a lost opportunity, too, because the regulations to set up the scheme do not contain the sort of broad provisions that could have made the scheme—and can still, I believe, make it—into a real bridge between the private and the maintained sectors.
I want to be as brief as I can because I know that others wish to speak.
I believe that there are two areas where the regulations could be improved without being in any way detrimental to our commitment to the assisted places scheme. First, assisted places should be available to children with special disabilities and handicaps. A girl in my constituency suffers from dwarfism and has the disadvantage that on the classifications for ESN she comes out slightly above the normal level for children who are taken into special schools in Hertfordshire.
On the other hand, it is felt that because of her condition she could probably not cope with a mainstream secondary school education. The Hertfordshire county council, which is forward thinking on such matters, has bent over backwards to try to accommodate the little girl. If an assisted place could be made available for her in, for example, a good private school near Watford run on Rudolf Steiner lines the whole scheme would be much more acceptable to many of us.
The scheme could also be improved through consultations with local education authorities. My hon. Friend the Member for Altrincham and Sale was disturbed about the fact that under the regulations entry into sixth forms involves consultation with local education authorities, but I should like to see such consultation extended to the whole scheme. If we did that, many of those whose opinion on this matter is valuable—including the headmaster of Westminster school; and we cannot afford to ignore such opinion formers—would regard the scheme as a good one which could be used for building a bridge between the two sectors.
I recognise that my right hon. and learned Friend cannot give a commitment tonight, but I ask him to tell us that the regulations are not a closed book

and that at some time the scheme could be extended in order to form a bridge between the two systems rather than a platform for the diversive rhetoric of the hon. Member for Bedwellty (Mr. Kinnock).

Mr. Christopher Price: I wish to raise the point that I brought out in an intervention during the Secretary of State's speech. If a person fills in falsely an income tax or social security return, or provides false details of his income when applying for a local authority grant, he can be proceeded against at law by the body concerned.
Am I right in assuming from the right hon. and learned Gentleman's answer to my intervention that there is no sanction in criminal law against a false declaration of income by a parent under the scheme? If I am wrong, who is responsible for applying the sanction? If fraud occurs—and the scheme is wide open to fraud, because those in the private schools have no experience of the technical job of administering such a system—who will be responsible for ensuring that public money that has been mis-spent is recovered for the public?

Mr. Mark Carlisle: I shall try to reply in the minute that remains for the debate. I referred to the hon. Member for Lewisham, West (Mr. Price) earlier to my power to withdraw the right for anyone to be in the scheme. In the wider context, the position that he outlined would be a question for the criminal law.
My hon. Friend the Member for Watford (Mr. Garel-Jones) asked about special schools, and we will consider that point. I should tell my hon. Friend the Member for Altrincham and Sale (Mr. Montgomery) that I have made it clear that if authorities choose to prevent regulations being used in the way that we intend I shall review them.
It was extraordinary that the right hon. Member for Durham, North-West (Mr. Armstrong) and the hon. Member for Berwick-upon-Tweed (Mr. Beith), who have both bitterly attacked the scheme and complained that it would damage State schools in their areas, should complain tonight that there were no independent schools available for the children in their areas. I took a note of the hon.
Gentleman's words. He said that they were being denied the opportunity to take part in the scheme, when all the rest of his complaints have been that the existence of the scheme would damage the educational opportunities of all the children in the area. The hon. Gentleman cannot have it both ways, even if he tries to do it in the nicest possible way.
The regulations put flesh on a scheme that I believe will be of assistance to

children. The hon. Gentleman showed a total lack of knowledge of the scheme, its size and its effect in different areas. I believe that it will give independent help to various children, and that will be to the advantage of the country as a whole.

Question put:—

The House divided: Ayes 295, Noes 231.

Division No. 481]
AYES
11.45 p.m.


Adley, Robert
Dean, Paul (North Somerset)
Hooson, Tom


Aitken, Jonathan
Dickens, Geoffrey
Hordern, Peter


Alexander, Richard
Dorrell, Stephen
Howell, Rt Hon David (Guildford)


Alison, Michael
Douglas-Hamilton, Lord James
Howell, Ralph (North Norfolk)


Amery, Rt Hon Julian
Dover, Denshore
Hunt, David (Wirral)


Ancram, Michael
du Cann, Rt Hon Edward
Hunt, John (Ravensbourne)


Arnold, Tom
Dunn, Robert (Dartford)
Irving, Charles (Cheltenham)


Aspinwall, Jack
Durant, Tony
Jenkin, Rt Hon Patrick


Atkins, Rt Hon H. (Spelthorne)
Eden, Rt Hon Sir John
Jessel, Toby


Atkins, Robert (Preston North)
Edwards, Rt Hon N. (Pembroke)
Johnson Smith, Geoffrey


Atkinson, David (B'mouth, East)
Egger, Tim
Jopling, Rt Hon Michael


Baker, Kenneth (St. Marylebone)
Elliott, Sir William
Joseph, Rt Hon Sir Keith


Baker, Nicholas (North Dorset)
Eyre, Reginald
Kellett-Bowman, Mrs Elaine


Beaumont-Dark, Anthony
Fairbairn, Nicholas
Kershaw, Anthony


Bell, Sir Ronald
Fairgrieve, Russell
Kimball, Marcus


Bendall, Vivian
Faith, Mrs Sheila
King, Rt Hon Tom


Bennett, Sir Frederic (Torbay)
Farr, John
Kitson, Sir Timothy


Benyon, Thomas (Abingdon)
Fell, Anthony
Knight, Mrs Jill


Benyon, W. (Buckingham)
Fenner, Mrs Peggy
Lamont, Norman


Best, Keith
Finsberg, Geoffrey
Lang, Ian


Bevan, David Gilroy
Fisher, Sir Nigel
Langford-Holt, Sir John


Biffen, Rt Hon John
Fletcher, Alexander (Edinburgh N)
Latham. Michael


Biggs-Davison, John
Fletcher-Cooke, Charles
Lawrence, Ivan


Blackburn, John
Fookes, Miss Janet
Lawson, Nigel


Blaker, Peter
Forman, Nigel
Lee, John


Body, Richard
Fowler, Rt Hon Norman
Lennox-Boyd, Hon Mark


Bonsor, Sir Nicholas
Fox, Marcus
Lester, Jim (Beeston)


Boscawen, Hon Robert
Fraser, Rt Hon Sir Hugh
Lloyd, Ian (Havant & Waterloo)


Bowden, Andrew
Fraser, Peter (South Angus)
Lloyd, Peter (Fareham)


Boyson, Dr Rhodes
Fry, Peter
Loveridge, John


Braine, Sir Bernard
Galbraith, Hon T. G. D.
Luce, Richard


Bright, Graham
Gardiner, George (Reigate)
Lyell, Nicholas


Brinton, Tim
Gardner, Edward (South Fylde)
Macfarlane, Neil


Brittan, Leon
Garel-Jones, Tristan
MacKay, John (Argyll)


Brocklebank-Fowler, Christopher
Gilmour, Rt Hon Sir Ian
Macmillan, Rt Hon M. (Farnham)


Brooke, Hon Peter
Glyn. Dr Alan
McNair-Wilson, Michael, (Newbury)


Brotherton, Michael
Goodlad, Alastair
McNair-Wilson, Patrick (New Forest)


Brown, Michael (Brigg & Sc'thorpe)
Gorst, John
McQuarrie, Albert


Browne, John (Winchester)
Gow, Ian
Madel, David


Bruce-Gardyne, John
Gower, Sir Raymond
Major, John


Bryan, Sir Paul
Grant, Anthony (Harrow C)
Marland, Paul


Buchanan-Smith, Hon Alick
Gray, Hamish
Marlow, Tony


Buck, Antony
Grieve, Percy
Marshall, Michael (Arundel)


Budgen, Nick
Griffiths, Eldon (Bury St Edmunds)
Marten, Neil (Banbury)


Bulmer, Esmond
Griffiths, Peter (Portsmouh N)
Mates, Michael


Burden, Sir Frederick
Grist, Ian
Mather, Carol


Butcher, John
Grylls, Michael
Maude, Rt Hon Angus


Butler, Hon Adam
Gummer, John Selwyn
Mawby, Ray


Cadbury, Jocelyn
Hamilton, Hon Archie (Eps'm & Ew'll)
Mawhinney, Dr Brian


Carlisle, John (Luton West)
Hamilton, Michael (Salisbury)
Maxwell-Hyslop, Robin


Carlisle Kenneth (Lincoln)
Hampson, Dr Keith
Mayhew, Patrick


Carlisle, Rt Hon Mark (Runcorn)
Hannam, John
Meyer, Sir Anthony


Chalker, Mrs. Lynda
Haselhurst, Alan
Miller, Hal (Bromsgrove & Redditch)


Channon, Bt Hon Paul
Hastings, Stephen
Mills, Iain (Meriden)


Chapman, Sydney
Havers, Rt Hon Sir Michael
Mills, Peter (West Devon)


Churchill, W. S.
Hawkins, Paul
Mitchell, David (Basingstoke)


Clark, Hon Alan (Plymouth, Sutton)
Hawksley, Warren
Moate, Roger


Clarke, Kenneth (Rushcliffe)
Hayhoe, Barney
Monro, Rector


Clegg, Sir Walter
Heddle, John
Montgomery, Fergus


Colvin, Michael
Henderson, Barry
Moore, John


Cope, John
Heseltine, Rt Hon Michael
Morgan, Geraint


Cormack, Patrick
Higgins, Rt Hon Terence L.
Morris, Michael (Northampton, Sth)


Corrie, John
Hill, James
Morrison, Hon Charles (Devizes)


Costain, Sit Albert
Hogg, Hon Douglas (Grantham)
Murphy, Christopher


Crouch, David
Holland, Philip (Carlton)
Myles, David




Neale, Gerrard
Rossl, Hugh
Thompson, Donald


Needham, Richard
Rost, Peter
Thorne, Nell (Ilford South)


Nelson, Anthony
Sainsbury, Hon Timothy
Thornton, Malcolm


Neubert, Michael
St. John-Stevas, Rt Hon Norman
Townend, John (Bridlington)


Normanton, Tom
Scott, Nicholas
Townsend, Cyril D. (Bexleyheath)


Nott, Rt Hon John
Shaw, Michael (Scarborough)
Trippier, David


Onslow, Cranley
Shelton, William (Streatham)
van Straubenzee, W. R.


Oppenheim, Rt Hon Mrs Sally
Shepherd, Colin (Hereford)
Vaughan, Dr Gerard


Page, John (Harrow, West)
Shepherd. Richard (Aldridge-Br'hills)
Waddington, David


Page. Rt Hon Sir Graham (Crosby)
Shersby, Michael
Wakeham, John


Page, Richard (SW Hertfordshire)
Silvester, Fred
Waldegrave, Hon William


Parris, Matthew
Sims, Roger
Walker, Bill (Perth & E Perthshire)


Patten, Christopher (Bath)
Skeet, T. H. H.
Walker-Smith, Rt Hon Sir Derek


Patten, John (Oxford)
Speed, Keith
Wall, Patrick


Pattie, Geoffrey
Speller, Tony
Walters, Dennis


Pawsey, James
Spence, John
Ward, John


Percival, Sir Ian
Spicer, Jim (West Dorset)
Warren, Kenneth


Pink, R. Bonner
Spicer, Michael (S Worcestershire)
Watson, John


Pollock, Alexander
Sproat, Iain
Wells, John (Maidstone)


Porter, Barry
Squire, Robin
Wells, Bowen (Hert'rd & Stev'nage)


Price, Sir David (Eastleigh)
Stainton, Keith
Wheeler, John


Prior, Rt Hon James
Stanbrook, Ivor
Whitney, Raymond


Proctor, K Harvey
Stanley, John
Wickenden, Keith


Pym, Rt Hon Francis
Steen, Anthony
Wiggin, Jerry


Raison, Timothy
Stevens, Martin
Wilkinson, John


Rees, Peter (Dover and Deal)
Stewart, Ian (Hitchin)
Williams, Delwyn (Montgomery)


Rees-Davies, W. R.
Stewart, John (East Renfrewshire)
Winterton, Nicholas


Renton, Tim
Stokes, John
Wolfson, Mark


Rhodes James, Robert
Stradling Thomas, J.
Young, Sir George (Acton)


Rhys Williams, Sir Brandon
Tapsell, Peter
Younger, Rt Hon George


Ridley, Hon Nicholas
Taylor, Robert (Croydon NW)



Rifkind, Malcolm
Taylor, Teddy (Southend East)
TELLERS FOR THE AYES:


Rippon, Rt Hon Geoffrey
Tebbit, Norman
Mr. Spencer Le Marchant and


Roberts, Michael (Cardiff NW)
Thatcher, Rt Hon Mrs Margaret
Mr. Anthony Berry.


Roberts, Wyn (Conway)
Thomas, Rt Hon Peter (Hendon S)





NOES


Abse, Leo
Deakins, Eric
Hart, Rt Hon Dame Judith


Adams, Allen
Dean, Joseph (Leeds West)
Hattersley, Rt Hon Roy


Allaun, Frank
Dempsey, James
Haynes, Frank


Alton, David
Dewar, Donald
Healey, Rt Hon Denis


Anderson, Donald
Dixon, Donald
Heffer, Eric S.


Archer, Rt Hon Peter
Dobson, Frank
Hogg, Norman (E Dunbartonshire)


Armstrong, Rt Hon Ernest
Dormand, Jack
Holland, Stuart (L'beth, Vauxhall)


Ashley, Rt Hon Jack
Douglas, Dick
Home Robertson, John


Ashton, Joe
Douglas-Mann, Bruce
Homewood, William


Atkinson, Norman (H'gey, Tott'ham)
Dubs, Alfred
Hooley, Frank


Bagier, Gordon A. T.
Duffy, A. E. P.
Horam, John


Barnett, Guy (Greenwich)
Dunn, James A. (Liverpool, Kirkdale)
Huckfield, Les


Barnett, Rt Hon Joel (Heywood)
Dunnett, Jack
Hughes, Robert (Aberdeen North)


Beith, A. J.
Dunwoody, Hon Mrs Gwyneth
Janner, Hon Greville


Benn, Rt Hon Anthony Wedgwood
Eadie, Alex
John, Brynmor


Bennett, Andrew (Stockport N)
Eastham, Ken
Johnson, James (Hull West)


Bidwell, Sydney
Edwards, Robert (Wolv SE)
Johnson, Walter (Derby South)


Booth, Rt Hon Albert
Ellis, Raymond (NE Derbyshire)
Johnston, Russell (Inverness)


Bradley, Tom
Ellis, Tom (Wrexham)
Jones, Rt Hon Alec (Rhondda)


Bray, Dr Jeremy
English, Michael
Jones, Barry (East Flint)


Brown, Hugh D. (Provan)
Ennals, Rt Hon David
Jones, Dan (Burnley)


Brown, Robert C. (Newcastle W)
Evans, Ioan (Aberdare)
Kaufman, Rt Hon Gerald


Brown, Ron (Edinburgh, Leith)
Evans, John (Newton)
Kilfedder, James A.


Buchan, Norman
Ewing, Harry
Kinnock, Neil


Callaghan, Jim (Middleton & P)
Faulds, Andrew
Lamble, David


Campbell, Ian
Field, Frank
Lamborn, Harry


Campbell-Savours, Dale
Fitch, Alan
Leadbitter, Ted


Canavan, Dennis
Flannery, Martin
Leighton, Ronald


Cant, R. B.
Fletcher, Raymond (Ilkeston)
Lestor, Miss Joan (Eton & Slough)


Carmichael, Neil
Fletcher, Ted (Darlington)
Lewis, Ron (Carlisle)


Carter-Jones, Lewis
Foot, Rt Hon Michael
Litherland, Robert


Cartwright, John
Forrester, John
Lofthouse, Geoffrey


Clark, Dr David (South Shields)
Foulkes, George
Lyons, Edward (Bradford West)


Cocks. Rt Hon Michael (Bristol S)
Fraser, John (Lambeth, Norwood)
McCartney, Hugh


Conlon. Bernard
Freeson, Rt Hon Reginald
McDonald, Dr Oonagh


Cook, Robin F.
Garrett, John (Norwich S)
McElhone, Frank


Cox, Tom (Wandsworth, Tooting)
George, Bruce
McGuire, Michael (Ince)


Craigen, J. M. (Glasgow, Maryhill)
Gilbert, Rt Hon Dr John
McKay, Allen (Penistone)


Crowther, J. S.
Ginsburg, David
McKelvey, William


Cryer, Bob
Golding, John
MacKenzie, Rt Hon Gregor


Cunliffe, Lawrence
Gourlay, Harry
Maclennan, Robert


Cunningham, Dr John (Whitehaven)
Graham, Ted
McNamara, Kevin


Davidson, Arthur
Grant, George (Morpeth)
McTaggart, Robert


Davies, Rt Hon Denzil (Llanelll)
Grant, John (Islington C)
Magee, Bryan


Davies, Ifor (Gower)
Hamilton, W. W. (Central Fife)
Marks, Kenneth


Davis, Clinton, (Hackney Central)
Hardy, Peter
Marshall, David (Gl'sgow, Shettles'n)


Davis, Terry (B'rm'ham, Stechtord)
Harrison, Rt Hon Walter
Marshall, Dr Edmund (Goole)







Marshall, Jim (Leicester South)
Roberts, Albert (Normanton)
Taylor, Mrs Ann (Bolton West)


Marlin, Michael (Gl'gow, Springb'rn)
Roberts, Allan (Bootle)
Thomas, Jeffrey (Abertillery)


Mason, Rt Hon Roy
Roberts, Ernest (Hackney North)
Thomas, Mike (Newcastle East)


Maxton, John
Roberts, Gwilym (Cannock)
Thomas, Dr Roger (Carmarthen)


Maynard, Miss Joan
Robinson, Geoffrey (Coventry NW)
Thorne, Stan (Preston South)


Meacher, Michael
Rodgers, Rt Hon William
Tilley, John


Mellish, Rt Hon Robert
Rooker, J. W.
Torney, Tom


Mikardo, Ian
Roper, John
Urwin, Rt Hon Tom


Milian, Rt Hon Bruce
Ross, Ernest (Dundee West)
Varley, Rt Hon Eric G.


Miller, Dr M. S. (East Kilbride)
Rowlands, Ted
Wainwright, Edwin (Dearne Valley)


Mitchell, Austin (Grimsby)
Ryman, John
Walker, Rt Hon Harold (Doncaster)


Mitchell, R. C. (Soton, Itchen)
Sever, John
Weetch, Ken


Morris, Rt Hon Charles (Openshaw)
Sheerman, Barry
Wellbeloved, James


Morris, Rt Hon John (Aberavon)
Sheldon, Rt Hon Robert (A'ton-u-L)
Welsh, Michael


Moyle, Rt Hon Roland
Shore, Rt Hon Peter (Step and Pop)
White, Frank R. (Bury & Radcliffe)


Newens, Stanley
Silkin, Rt Hon John (Deptford)
White, James (Glasgow, Pollok)


Oakes, Rt Hon Gordon
Silkin, Rt Hon S.C. (Dulwich)
Whitehead, Phillip


O'Halloran, Michael
Silverman, Julius
Whitlock, William


O'Neill, Martin
Skinner, Dennis
Willey, Rt Hon Frederick


Orme, Rt Hon Stanley
Smith, Rt Hon J. (North Lanarkshire)
Williams, Rt Hon Alan (Swansea W)


Owen, Rt Hon Dr David
Snape, Peter
Williams, Sir Thomas (Warrington)


Palmer, Arthur
Soley, Clive
Wilson, William (Coventry SE)


Parker, John
Spearing, Nigel
Winnick, David


Parry, Robert
Spriggs, Leslie
Woodall, Alec


Pavitt, Laurie
Stallard, A. W.
Woolmer, Kenneth


Pendry, Tom
Steel, Rt Hon David
Wrigglesworth, Ian


Penhallgon, David
Stoddart, David
Young, David (Bolton East)


Powell, Raymond (Ogmore)
Stott, Roger



Price, Christopher (Lewisham West)
Strang, Gavin
TELLERS FOR THE NOES:


Race, Reg
Straw, Jack
Mr. George Morton and


Radice, Giles
Summerskill, Hon Dr Shirley
Mr. James Tinn.


Richardson, Jo

Question accordingly agreed to.

Resolved.

That the draft Education (Assisted Places) Regulations 1980, which were laid before this House on 21st July, be approved.

AIRCRAFT AND SHIPBUILDING INDUSTRIES (NATIONALISATION COMPENSATION)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Boscawen.]

Mr. Ian Lang: I am grateful for this opportunity to raise the question of compensation under the Aircraft and Shipbuilding Industries Act 1977 because it is now a matter of urgency and gravity to the companies involved and to all who value justice.
Although I established some time ago with the Registrar of Members' Interests that I have no interest to declare it is as well, in order to remove any possibility of misunderstanding at the outset, that I state that I was a small shareholder in John G. Kincaid and Company Limited, marine engine builder of Greenock, which was nationalised under the 1977 Act and for which compensation was agreed and a final instalment paid more than a year ago.
Far from weakening my case tonight, I believe that that fact strengthens it. First, I have had occasion to follow the progress of events since 1974 more closely than some hon. Members. Second, it is not part of my case that every company has received less than it deserved. Nor do I consider that all the affected companies are equally deserving of more.
It appears to be the case that for those who either have not settled or who have despairingly accepted what was offered, while reserving the right to press for more, the terms offered have been especially unfair, and the continuing delay has made matters even worse. It is no argument for a Government to say that because they cannot turn back the clock to the beginning they cannot do anything at all. To do justice even to half of the injured parties does not compound an injustice; it halves it.
My hon. Friend the Minister will know from correspondence that I have had with his Department of my interest in the cases of two Scottish shipbuilding companies that are gravely affected by the Act, namely, Yarrow and Scott Lithgow. They are two fine, long-established Scottish companies, with world-wide reputations, which the previous Labour Government were able to nationalise, moving. control from Scottish hands to the Whitehall bureaucracy only with the active connivance of the Scottish National Party. To date, Yarrow, has secured


only £6 million in compensation—£1 million less than its pre-tax profits in 1974 alone. Scott Lithgow has received, on account, the princely sum of £750,000.
It must be emphasised that in the overwhelming majority of cases the compensation amounts will not line the pockets of individual shareholders but will go to successful, proven companies, such as the two that I mentioned, to enable them to create new employment where it is badly needed. During the past three years Scott Lithgow has trebled real output and doubled employment. It is now having to cut back heavily on its development programme because the Department of Industry has held on to its money. Otherwise, it had expected to double its numbers again. From talking to my hon. Friend the Member for Argyll (Mr. MacKay) I know of the dramatic improvement in employment in part of his constituency that that could generate. Yarrow could doubtless tell a similar story.
I hope that any comments have a general application. I refer as a starting point to the written statement of my right hon. Friend the Secretary of State on 7 August, first, that the Government were postponing their plans to denationalise the shipbuilding industry and, secondly, that while admitting that the compensation terms of the 1977 Act had been grossly unfair to some of the companies, they proposed to do nothing about it. Those two announcements hit the industry like a double blast from a sawn-off shotgun. The gross unfairness of the formula in the 1977 Act needs a little re-emphasis. First, there was the six months' reference period from September 1973 to February 1974, on which the average stock market price was assessed—so short a period and so long before vesting date. Many of the companies, indeed most, were not listed on the Stock Exchange. Negotiations had to take place on the basis of what the quoted share price would have been if they had been listed. Already we are in Alice-in-Wonderland territory.
The whole case was founded on a fiction. But it was a fiction hedged about with a number of distorting facts—the reference period coincided with a depressed stock market, the Arab-Israeli war, the quadrupling of oil prices, the three-day working week in the United

Kingdom and the threat of nationalisation of companies. Even in normal times the Stock Exchange price does not reflect the takeover value of the company when complete control is being obtained. Usually there is a substantial premium reflecting the additional value of total ownership and control. Because the reference period to which valuations are related ended more than three years before the actual date of nationalisation on 30 June 1977, no allowance was made for the changed circumstances of some companies during that period.
Payments of compensation were satisfied by the issue of 9i per cent. Treasury stock maturing in April 1981. That interest rate was significantly below the interest rates that had prevailed since June 1977, which had averaged above 12 per cent. Even the recent coupon, which I understand has been higher than the 91 per cent., certainly does not rectify that complaint. Although interest payments were back-dated to 1 July 1977, no concession was made for the ballooning of payments received within one tax year. The stock issued has the added refinement of meanness in being exceptionally liable to capital gains tax on encashment.
The result of all this is a series of grotesque anomalies, of which there are many examples. I mention Vosper as one. This was a company with fixed assets of £25 million and with £5½ million cash in the bank, which was offered £4½ million. Of course, all this lies at the door of the previous Government and not the present one. I am relieved that my right hon. and hon. Friends should share my view of its gross unfairness, but their unwillingness to do anything about it is what alarms me, because in doing nothing they are condoning the unacceptable face of Socialism.
If they said that the terms were fair and that they would do nothing, that would be wrong but honourable. If they said that the terms were grossly unfair and that they would do something about it, that would be right and honourable. But if they say, as they have done, that the terms are grossly unfair but that they intend to do nothing about it, that seems. to me to produce the worst of all possible worlds. I ask my hon. Friend how such a stance can honourably be sustained or defended.
Are the Government willing to leave on the statute book as a precedent for possible future nationalisation a basis of compensation that is so far removed from all the nationally and internationally recognised standards of fairness and justice? We know that the Labour Party has plans for further sweeping nationalisation. Are we to leave on the statute book, unquestioned, this formula for future confiscations? As Shakespeare's Portia said:
Twill be recorded for a precedent,
And many an error by the same example
Will rush into the state.
That lady's other views on justice are also fairly well documented.
Are the Government willing to defend such gross unfairness, to use their own phrase, in the face of a judgment by the Court of Human Rights at Strasbourg, for that is where the matter will certainly go? They may point out that most, although not all, of the companies have now settled. That is so, but only in the sense that a starving man will take the crust that is offered to him. It does not prejudice his right to a square meal, especially when the food comes from what was his own larder.
The Government may point out that there was scope for arbitration in the 1977 Act. But the powers of the arbitration tribunal were limited within the parameters of the Act itself. They may point out that they are subject to very tight expenditure constraints and cannot afford largesse. But it is not special treatment that is being asked for, or charity, or a higher priority in the allocation of expenditure. It is justice, and the capital at stake is the property of these companies, which was taken from them against their will.
My hon. Friend may suggest that the Government do not wish to set a precedent with retrospective legislation. I must point out that no such sensitivity constrained the previous Government, who legislated retrospectively to deny to the Burmah Oil Company compensation for its war-destroyed assets in the Far East. But in the case that we are now discussing, the retrospective legislation would be to right an admitted wrong. Surely nobody objects to that kind of retrospective legislation.
Even if it were to set a precedent, would not that precedent be preferable to the more sinister precedent that the Government now seem to be setting by allowing the breaching of a long-established constitutional tradition that no Government can bind their successor? Evidently in this case the previous Government could. My right hon. Friends seem ineluctably bound to a precedent of unparalleled inequity.
What is most disquieting about the present position in the reason given by my right hon. Friend in his statement of 7 August, namely, that
to establish new compensation terms retrospectively would be unjust to the many people who sold shares on the basis of the previous terms".—[Official Report 7 August 1980; Vol. 990, c. 290.]
In other words, because we cannot be fair to everyone we are not prepared to be fair to anyone. That argument ignores the corresponding unfairness to the many others who bought shares, or to the many who retained shares in the expectation that the new Government would bring them justice. My right hon. and hon. Friends need not take this from me. Let me quote from a letter from the chairman of the Stock Exchange. Mr. Nicholas Goodison writes:
it is irrelevant to argue that such injustices cannot be rectified because many shareholders will already have sold their shares on the basis of the original terms. The argument has no validity in the context of the stock market. Dealings take place on the basis of full disclosure of all relevant information as it exists at the time of dealing. Investors may be influenced in their dealing decision by many facts, hopes or fears. These include political considerations. Everyone was fully aware of the possibility of a change of Government, and might have reasonably hoped for a re-consideration of the compensation terms under the Act. Those who have already sold are likely to have considered this possibility. But whether or not this was so in any particular instance, a selling shareholder cannot argue that the terms on which he sold in the market have been invalidated by subsequent events. Were it otherwise, the stock market could not operate".
In my view, the argument of my right hon. Friend The Secretary of State for Industry has no foundation either in market logic or practice.

Mr. Peter Lloyd: Is not the Government's position on this point even more untenable than the chairman of the Stock Exchange indicates? When they were in opposition the Conservatives


took good care not to rule out the possibility of the change of the settlement. Indeed, they condemned it so fiercely when it went through Parliament that shareholders had excellent reason for expecting such changes to be made when the Conservatives came into power. Therefore the balance of injustice must lie in leaving matters as they are.

Mr. Lang: My hon. Friend is right, and the point that he makes strongly underlines the forceful letter from the chairman of the Stock Exchange. The National Association of Pension Funds, representing many institutional investors who have held shares in the affected companies or their holding companies has written a letter stating a similar view.
But there is a new factor in the whole equation of injustice—the unconscionable delay that has taken place. It is that delay that creates a new situation. I believe that even the Socialist perpetrators of the 1977 Act would have paused if they had known that three years after vesting date and seven years from the reference period this matter would still be unresolved and their formula would have depreciated by over 60 per cent. The cost of living has risen by over 2½ times in that seven-year period and the affected companies have been offered not one penny more on that account. They are frozen like fossils in another age, when today's 40p was worth £1.
I say to my right hon. Friends that to do nothing now but simply to acquiesce in the existing arrangements is not just to be neutral; it is to create a new injustice. It is to compound the gross unfairness of the original Act. That is why I ask them to take a new initiative and I remind them that last July over 100 of my right hon. and hon. Friends signed early-day motion 760 calling for action, and that 153 right hon. and hon. Members supported the Ten-Minute Bill so ably moved by my hon. Friend the Member for Fareham (Mr. Lloyd).
I ask my right hon. Friends to set up an independent commission comprising representatives from industry, commerce and the Stock Exchange, chaired by a judge, with wide powers to re-examine the whole affair, to consider alternative methods of rectifying it and to make recommendations.
Among the points that such a commission would consider must surely be the question of index-linking and an option to revert to an asset-related formula for compensation, as at vesting day. Those are the two approaches that would bring most justice to those who have suffered the greatest injustice.
This whole shabby business of aircraft and shipbuilding nationalisation has left a dark stain upon the record of the previous Government. Sadly, today that stain is still wet. It is in danger of spreading until it taints the record of this Administration. That is why I urge my right hon. and hon. Friends to take action with all deliberate speed to right a serious wrong.

The Under-Secretary of State for Industry (Mr. Michael Marshall): I have listened with interest and sympathy to the plea of my hon. Friend the Member for Galloway (Mr. Lang) on behalf of certain of the former owners of nationalised aircraft and shipbuilding companies. I congratulate him on the way in which he puts his arguments and I appreciate the interest that he has taken in the matter over a long period, particularly in regard to Yarrow and Scott Lithglow. I recognise the intervention by my hon. Friend the Member for Fareham (Mr. Lloyd), with his interest in Vosper, which I have also followed with close interest. I also recognise the interest of others of my hon. Friends who are present.
I remind the House that my right hon. Friend the Secretary of State said in his statement to the House on 7 August:
We recognise that some previous owners and many Members of this House … believe that the terms of compensation imposed by the 1977 Act were grossly unfair to some of the companies and we share this view."—[Official Report, 7 August 1980; Vol. 990, c. 290.]
In other words, we are on common ground with much of the basic argument that has been put forward tonight. However, sadly, it is one thing to recognise that legislation is unfair and another to devise ways of putting that unfairness right, in circumstances where the legislation has been in force for a considerable time and many people have entered into financial transactions on the existing basis.
A good deal has been made of the fact, not just here but elsewhere, that in


opposition the Conservative Party bitterly opposed the legislation leading to the nationalisation of the aircraft and shipbuilding industries, and remarks made by sonic of my right hon. and hon. Friends at that time have been quoted to us with the intention of spurring us into introducing amending legislation. It has also been suggested that not to put right the unfairness relating to certain companies could make it much easier for a future Labour Administration to carry out further nationalisation on the same unfair basis or on even less satisfactory terms.
If I may, I will for the moment return to my right hon. Friend's statement of 7 August. He told the House that the Government had explored every possibility to right the injustice done by the previous Government. I can reaffirm that that is so. This has been a task with which my hon. Friend the Minister of State, who is present tonight, and I have been closely involved, but we have regretfully concluded that to amend the compensation terms retrospectively would be unfair to all those people who had acted on them and sold their shares in those companies or in companies which formerly owned the nationalised businesses.
I am sure that my hon. Friend, despite what he has said in criticism of the Government must, in his heart of hearts, realise that if the Government had been able to see any way to remedy the perceived injustice to certain companies, we would not have hestitated to take such action. But, of course, it is not simply a question of waving a wand to remedy an injustice and to turn back the clock, or to implement a few simple principles which will leave everyone happy with the results.
What is being said in this case, though it may be unpopular for me to say so, is in fact special pleading. Because certain former owners have not received what they, and we ourselves, might consider to be fair compensation for the nationalisation of their enterprises, they seek major changes in the 1977 Act. Such changes would almost inevitably lead to a re-examination of the position of others of the 25 companies nationalised, whose former owners have long since agreed to the amount of their compensation and received payment. Indeed, there was no problem in many of these cases. My hon.
Friend will be aware that the problem of delay has, by definition, related to arguments over terms and settlements.
It follows that we have, therefore, two categories here, of those who have settled and those who have still not settled over the period in question. We have to weigh on the one hand the understandable grievances of a limited number of companies against the incalculable damage which could be done by the Government's not only condoning but actually introducing into our system of Government the principle that it is permissible, even laudable, to introduce legislation amending an Act duly passed by Parliament, whose provisions are still operative, and on the basis of which large numbers of individuals and companies have entered into transactions.
On this occasion it might be done—and my hon. Friend has certainly argued his case well—with the best will in the world, to try to cure the legitimate grievances of certain citizens. But there is no saying that on a future occasion the precedent would be used for such benevolent purposes. I believe that tremendous confusion would be introduced into people's everyday dealings if they were in a constant state of apprehension about the permanence of legal provisions under which they are operating.
May I remind the House of some of the background facts in this matter? The Labour Government announced compensation terms in March 1975 and this was done in some detail. Thus five and a half years have passed since it was made clear what the intentions of the Government were at that time. Although we ourselves were extremely vigorous in our criticism of the compensation terms, the resistance of the Labour Government to any amendments was equally determined. I remind the House that the Conservative Party gave no undertaking before taking office that it would repeal or change this legislation. Since coming into office, the position has been very thoroughly examined, but we have made no statement that would lead anyone to suppose that amendment of the Act was a possibility. Indeed, the Government have continued to implement the Act by entering into settlements with those former owners who were willing and ready to sign settlements.
The present position is that compensation has to be settled for 25 companies; 11 were covered by settlements before we took office, three more before the announcement in August, and six subsequently. We are thus concerned with five remaining cases.
As my hon. Friend said, the real cause of the trouble is the length of time between the introduction of the Bill and its becoming law in 1977. During that time, the fortunes of the companies to be nationalised fluctuated. Some of them performed very poorly, while a small number improved their performance, some of them quite remarkably and all credit to them. Of course—and ironically—it was our own success in opposition that, by contesting the passage of the Bill, caused this problem of delay.
The owners of some of those companies would like the Government to change the compensation terms so that compensation is based on the value of the enterprise at vesting day. Whilst this would undoubtedly benefit that minority of the companies which had improved their profit record during the long interval, the logical corollary of this—I urge my hon. Friends to consider this aspect carefully—is that those companies whose performance deteriorated would do very much worse. The principle of retrospective amendment would thus appear to extend to attempts to recover compensation paid under settlements long ago concluded.
The precedent there is one that must be weighed carefully. In terms of fairness, whole new arguments would appear. Even if new terms were made available as an optional alternative, it is not self-evident what alternative formula would fit properly with the general scheme of the 1977 Act. Indeed, the act of giving such an option might well be construed as giving an unfair advantage to those who had already settled on the existing terms, and who could well seek to reopen their cases. The further delays involved in passing amending legislation and in reopening negotiations on the altered basis are self-evident. A change in the terms is thus not to be regarded as the easy way which perhaps some might suggest.
While we very much sympathise with those who feel aggrieved by the

operation of the Act, I have to say in all honesty that 1 believe they are ignoring or brushing aside important points of principle in the light of what they feel to be injustice in the situation as it relates to them. The Government have to take a wider view, and after full and careful consideration we came to the decision which was announced by my right hon. Friend in August. It was not an easy decision to make, and we fully realise its unpopularity in certain quarters.
In this connection, I turn to the criticism of the Government's reasoning which has been voiced, among others, by the chairman of the Stock Exchange. My hon. Friend has referred to this tonight. It is pointed out that people who sell their shares on the Stock Exchange have to take their chance that subsequent events may invalidate the reasons for which they considered selling to be appropriate at the time. Therefore, it is said, there is no justification for refusing to amend the 1977 Act on the grounds that those who sold their shares in those years following the then Government's announcement in 1975 would be entitled to complain about the change of Government policy.
Clearly, as a general principle of stock market transactions, buyers and sellers have to accept that subsequent events may make their decisions look ill-advised. That, however, is not the question here. What we are considering here is whether the Government have a moral responsibility towards a selling shareholder in a nationalised enterprise or its parent company in the event of a retrospective change in the compensation terms being made by that Government.
Here I turn to what I think is a key constitutional issue. As far as I am aware, there has never been a case where compensation terms laid down in a safeguarding statement and subsequently enacted by Parliament were altered by legislation of another Parliament. We have in fact as a party consistently deplored retrospective legislation of all kinds. Coupled with the fact that, as I have already said, the party gave no indication that it intended to repeal or amend this legislation, either before the last general election or since taking office, there can have been no expectation on the part of shareholders that any such amendment


was contemplated, except on a speculative basis.
There is also the matter of the effect of inflation. There is little resemblance between movements in stock market prices and the course of inflation. To introduce some form of indexing would have very far-reaching implications again.
My hon. Friend referred to the intention of some former owners to raise under the European Convention on Human Rights their complaints about compensation under the 1977 Act. The Government are not presently aware of the arguments which are likely to be advanced before the European Commission on Human Rights in support of these complaints but have no reason to suppose that the 1977 Act involves a breach of the convention.
My hon. Friend spoke repeatedly of fairness, and I have to say that the Government have reached the view that within the formula laid down by the Act, compensation has been negotiated on a fair basis. Moreover, it is important to stress that we have reviewed each outstanding case in great detail and, wherever possible, made improved offers. I must also point out that the Act provides for reference to an independent tribunal if agreement cannot be reached in negotiation with the Secretary of State. Some former owners have taken advantage of this provision. We fully respect the right of anyone who feels aggrieved by the existing legislation to have recourse to such arbitration, and we, for our part, will readily accept the outcome of the independent tribunal's assessment.
To sum up, I am not defending the Act. Indeed, I was one of those who had the privilege of opposing it. But the fact is that in certain cases its operation

does give rise to justifiable grievances. However, the Government are convinced that amendment at this very late stage would raise equally justifiable grievances among many other people, and, even more important, would introduce a dangerous possibility of turbulence into our legislative process, as a result of which people would never be clear where they stood under any enactment. It would certainly give ammunition to those critics who constantly complain that business and industry have variations of policy with each change of Government.
If the Government could have found a way of meeting the problems of those who have sought to have the Act amended they would have been only too happy to go ahead on that basis. I am sure that no one on my side of the House can doubt that. I assure hon. Members that the question was studied exhaustively. The conclusion that we reached was, in the circumstances, the only proper course open to us, and, however unhappy we may feel about certain aspects of this matter, we must stand by that decision. Alongside this, we have done what we can within the limitations of the Act.
I very much appreciate the measured and reasoned way in which my hon. Friend spoke. I shall certainly consider all that he has had to say. However, just as he spoke plainly, I must give a direct and honest response to a very difficult matter. I hope that there is much more common ground on the Government Benches than may appear from some of the arguments that we have had to explore tonight.

Question put and agreed to.

Adjourned accordingly at twenty-seven minutes past Twelve o'clock.